In my previous
post on oil I
wrote about bearish triangle that could be seen on 1, 2 and 4 hour charts. On
the one hand it failed to materialize when price rallied through upper trend
line of 45.50-46.00 (I took a small loss on that one). On the other hand, that
does not negate the fact that the commodity is still in a downtrend and may
resume its long term direction any time. You may look at 8 hour chart below and
you will see that for the third time price rallied to 200 ema on 8 hour chart
and each time a bearish pin candle pattern formed causing price to stall and
then to fall.
The same thing happened
today. You can see an indecision candle first, and then two bearish candles,
the second one being the signal for a short trade and if you had taken it (I
surely did) you would have made nice cash by now. I entered my short at 46.49
with a stop loss above the high of the current move (47.72) and I took my
profit at 45.20. Risk reward ratio on that was 1:1, but as the pattern was
really strongly bearish and easily took the trade without thinking much about
it.
Support remains as it was at
43.50-43.00 area. I do expect it to be broken soon and price to reach another
new low for the year. In my opinion oil is headed towards 30 and then possibly
to 20. I play it only from the short side for the time being.
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