Day trade
/
Sell
Trade view / 12 January 2018 at 9:26 GMT

Oil lower after 3-year high gives bears a rare opportunity

Director / PIA-First Limited
United Kingdom
Instrument: OILUSFEB18
Price target: 62.50
Market price: 63.42
Background

Oil prices continued to push higher on Thursday as expectations of a tightening market kept providing net support as US inventories declined to the lowest level in more than two years. A weaker US dollar was also a significant element providing support. 

Overall, WTI pushed to fresh 3-year highs above $64.50/barrel, with Brent also at 3-year highs as the March contract challenged the $70.0/b resistance level.

This has resulted in a shooting star being posted on the daily chart and a bearish engulfing on the 4-hour chart and gives aggressive bears a rare opportunity to short the market. Furthermore, this could be the early stages of a short-term head-and-shoulders reversal (not yet formed).

The initial target for this move will be support at the $62.50/b area, but a strong word of warning: medium term trend remains bullish so a trailing stop should considered.

Parameters

Entry: Sell at current levels ($63.42/b) and a rally to $63.70

Stop: Initially a break back above $64.20 but would advise a trailing stop

Target: $62.50 and $61.80

Time horizon: Intra-day

Charts:
c1
Source: SaxoTrader
 
c2
Source: SaxoTrader

Source: SaxoTrader


— Edited by John Acher

Non-independent investment research disclaimer applies. Read more
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13 January
Morris Morris
Hi ! Mate . Look at your weekly chart! $63 is key neckline of a massive inverse sHs? It is now short term resistance at if it breaks!!!!! Your take?
13 January
Morris Morris
There are also lots of inv sHs patterns on the weekly. Note one at $50 that was broken! There is strong momentum as per your note on the weekly MACD! Fight the trend?

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