Medium term
Trade view / 24 May 2016 at 8:14 GMT

WTI July future races to key resistance level

Trading Desk / Saxo Capital Markets

Since OILUSJUL16 failed to test $25 in February this year, it has been steadily rising and is now fast approaching the key resistance level of $50 which had been a major support level that initiated the huge surge back in 2007 and which converted to a solid resistance level in the GFC period; and most recently in October last year. This V-shape bottoming price action can be usually interpreted as a reversal pattern however, unless we see a genuine breakout above $50, this level is expected to restrict further strength as we have witnessed declining volume. Furthermore the rate of change (ROC) momentum indicator shows upside momentum had been fading during May while the price of oil was rising. 

If we examine the up-move from the January '16 low to the January '16 high and apply this range to the February '16 low (US $26.03) we witness decent overhead resistance levels at the following extension levels: 161.8%, 200% and 261.8%. 

At the 200% extension level we saw selling occur just below the $42.00 level which saw crude pull back 16%. With the strength in the US dollar index expected to continue and with expectations that crude will catch up with the selling seen in copper these past 3 weeks, we are looking at a sell opportunity at the 300% extension level which hovers just below the psychological level of $50.  

Management and risk description 

We use profit targets and stop losses to manage our risk.



Entry: Limit @ 49.85

Stop loss: 51.15

Target 1: 42.00

Target 2: 38.00

Time horizon: Until either our stop loss or profit targets are hit


Charts source: Saxo Bank. Create your own charts with SaxoTrader click here to learn more

— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more
24 May
Philidor Philidor
0.30 to stop loss and 7.85 to first target. It's a lottery ticket. I like it.
24 May
Philidor Philidor
Ooops, misread that! It's 51.15 not 50.15 Okay :)


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