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WTI: The Same Price But A Different Play

Rigs

The last time I wrote in these pages was two weeks ago, as I spent last weekend at a trader’s conference, and at that time, with WTI trading at just over $43, I said that I was unsure of where we went from there and would be sitting on my hands. If you don’t look at a chart and just know that we are now, two weeks later, trading at just above $43 that makes me look like a genius who can call lack of movement just as much as movement. The reality, however, looks like this…

(Click to enlarge)

Figure 1: Two week 30 minute chart for QM

Yes, while my indecision raged, WTI climbed a full ten percent and then dropped back again, all in a two week period. In fact, while I didn’t see the move up coming, I and my Energy Trading Team members did get short using the leveraged ETF DWTI on the way back down again, so it wasn’t a wasted couple of weeks.

Now that we are back at the same levels as two weeks ago though, it doesn’t mean that I am in the same place. This time there are less contradictory messages, and a few good reasons to believe that even from here we could see a fairly big move. As usual when a trade looks worth taking, both technical and fundamental analysis now point the same way.

From a technical perspective, while the shoulders are a little stubby and slightly deformed, the chart above still looks to me like a big head and shoulders pattern, or at least something that suggests the same thing. After…

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