Black gold, aka oil is in one of the strongest downtrends of all time. The collapse started at the end of last June and it is still continuing. Some say it may go down as low as 30 $ per barrel, others even claim that it will be 20 $ by the end of the year. A lot of oil producing and exporting countries are positioning themselves for lower income and planning their budgets accordingly.
What do traders do? Well, they trade in the direction of the prevailing trend. Despite the fact, oil is not at the best spot where you can take a long term short, from position of a short term trader I can say that you can simply wait for a rally and then place a short. Such a situation happened yesterday when price rallied above previous day’s high, formed a reversal structure and collapse.
A similar situation is happening now. Price rallies above Asian session high during US session, formed a peak, tried to break it one time and reversed by forming a classical reversal pattern M.
A short simply had to be placed when 13:45 (GMT) 15 minute candle closed. A stop has to be around 41.55 (just above today’s high). Let’s see how this short plays out.