Medium term
Trade view / 19 August 2016 at 10:03 GMT

The crude oil rally looks exhausted

Trader / Saxo Capital Markets Pte Ltd

We have seen a tremendous surge in Light Sweet Crude Oil (CLc1 on SaxoTraderGO), as it heads for its biggest weekly gain since April. Crude has risen 23% over the last 13 trading days and has today encountered resistance at the 76.4% retracement, from the high on June 09 (51.67) to the low on August 03 (39.19):

Crude Fibo
Source : SaxoTraderGO

The trade view would be to sell crude oil based on the technical evidence:

1) Stochastics (10,3,3) bearish crossover in oversold region
2) Shooting star candlestick indicating exhaustion of the current uptrend
3) Death cross with 50-day simple moving average below the 100-day SMA
4) Possible wave 4 (bearish) in the Elliot Wave formation

Crude Technicals
 Source: SaxoTraderGO. Create your own charts with SaxoTraderGO click here to learn more

Crude Elliot
 Source : SaxoTraderGO


Entry:  Sell CLV6 (Light Sweet Crude Oil (WTI) – Oct 2016) @ market (48.7).

Stop: We base our stop on 1 x ATR, i.e. 48.7 + 1.55 = 50.25.

Target: 45.00, calculated as 1.618 times of wave 2, for a reward to risk ratio of 2.38.

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
19 August
Armando_c Armando_c
You might underestimate the extreme speculative sentiment in the Oil market, this might very well go to 52-53 before a reversal.
19 August
John Roberti John Roberti
I believe Ole Hansen is right: we have experienced a huge covering of shorst that should be done now and all the fundamentals require a drop in the prices, particularly the situation in the US! I agree it will not really go higher than 51,50 on Brent or 49 on WTI
19 August
Edmund Liu Edmund Liu
Dear Armando, well you may be right, its anyone's guess how long the rally can be sustained. But it does seem like the rally is getting exhausted (based on the price action today) hence that's the basis for this trade view. We can wait till 52 or 53 to short but we may miss the turnaround completely if today is the turning point. Alternatively you may want to scale in the shorts at multi price levels, i.e. sell stop at 48.7, sell limit at 50 , sell limit at 52 , etc . Good luck!
22 August
Feders Feders
Hello!, I made a bear put spread 48/47,5, 24 days to expiration. Hopes goes well!
23 August
hikarihikki hikarihikki
Good call Edmund!
I think it was purely technicals and while sentiment was pretty bullish last week, I don't think this trade view was based on news/fundamentals. Cheers and good luck all!
23 August
Edmund Liu Edmund Liu
@Feders Thank you for sharing your trade idea, good luck
23 August
Edmund Liu Edmund Liu
@Hikarihikki Yes my trade views are purely technically driven. Hope it is going to turn out well for your trade


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail