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Oil has reversed from the minor pull back that has been in place for the last few weeks and turned sharply back up, as expected. The case for the corrective uptrend in Oil just gets stronger and stronger. If Oil takes out the last high of $42.63, look out, it is going to get very interesting. All three Oil trade ideas that we suggested; WLL, USO and TOO still look strong.
Oil has rallied for the last 3 days. We hope that it continues up and puts in a new high. But, hope isn’t a trading strategy, so we’ll have to see what the reality is. It isn’t all based on hope though, the bullish pattern that Oil is showing is grounded in solid technical analysis and the hypothesis for a recovery has not yet been disproven. The trades that we called out on; WLL, USO and TOO are still looking good, if you buy into the Oil recovery scenario. In the video we review the specific entry, stop and target levels for each of these trade ideas. We’ll provide the next update after the close on Friday and the picture should be clearer then.
Stay tuned…
Oil has been dropping for several days now. The thesis for a Bullish recovery in Oil is still intact. It would have to go put in new lows before we could say that there is no recovery and new lows are a long way away from current prices. Patience, resolve and discipline are the keys, once again, as we let the market tell us what it is going to do. It will!
Stay tuned…
The pullback in Oil continues. $37.09 is still an important support level, with a double bottom forming at ~$37.90 on the 60-minute chart. Bullish divergence is present and the high probability is a resumption of the uptrend soon.
WLL, USO and TOO still look like good trades. It might be prudent to wait for Oil to turn back up before getting into these now. The specific entry, stop and target levels are reviewed on live charts in thevideo.
Stay tuned…
Sure, prices have pulled back for a few days, but that is how price moves in an uptrend, Higher-Highs and Higher-Lows. The high probability is that Oil will quickly reverse back up, before getting down to the support level of $37.09, and continue the uptrend.
WLL still looks like a really good trade. Of course, it pulled back with Oil and that just means a better entry price at this time. Stop is still at $3.33 and will be trailed up when/if a new high is put in.
USO, same story as WLL, pulled back to a better entry. Stop still at $8.10, which I will trail up when/if anew high is put in.
Still really like TOO, but entry is not triggered yet. Waiting for a new high of $6.79 and then will take along position with initial stop at $2.62. If price blows through the entry, then I will trail stop up to about$4.95.
Today is Friday, Good Friday, and a good day to pause and update the week’s price action. I look forward to next week and will give an update on Tuesday.
Stay tuned…
No more evidence needed. Oil is headed up!
We had a couple of levels for Oil to go through to confirm the corrective wave up. First was $37.09, and then if there were skeptics, we said $39.03 should put all doubts to rest. We are at $41.01 as of this writing and no doubt remains – the recovery is on.
The targets for Oil remain $62.97-84.87 on the Crude Oil futures contract. Of course, that will take sometime and there will be rallies and pullbacks (Higher Highs and Higher Lows in Dow parlance) along the way. But the evidence is in and the high probability is that it is happening.
I called out a few trades that were good candidates to trade this recovery/corrective wave. WLL had an entry price of $8.57, initial stop of $3.33 and a target of $17.25. The entry was hit and I am in this trade. If new highs are put in, then I will trail the stop up to previous lows. USO had an entry price of $10.33,which was also hit. The stop is $8.10 and I will trail that up as well as new highs are put in.
A new trade idea for this update is TOO (Teekay Offshore Partners.) The fundamental people would cringe at this, but we are technical traders and the Technicals are great! We don’t care why it is going up, just that it is. It could be just a short covering rally and that is fine. The initial entry is just above previous resistance at $6.79, initial stop at $2.62 and a target of $16.09. If new highs are put in, then I will trail the stop up to previous lows. The reward/risk ratio on this is awesome and makes this trade worth taking a look at.
This promises to continue to be exciting (and profitable!) and I will continue to provide updates.
Stay tuned…
In the first Oil post, I said “if Oil futures go up through $37.09, the recovery is on.” In the second post, I said “Oil recovery is a go!” after it went through that level. And, I said pullback would be normal before going on to make new highs.
It is playing out in textbook fashion! If the latest high of $39.03 gets taken out, then that just makes the case for a corrective wave stronger and stronger.
Also in the last post, we looked at WLL (Whiting Petro) as a good stock to play Oil with. $8.57 was the trigger level to get in at. That triggered and this trade still really looks good. Entries are still possible. Initial stop is at $3.33 and the target price is $17.25. USO (Oil ETF) was another potential trade. Entry is good right now. Waiting for another high to be put in at $10.33 is a conservative way to play USO. Initial stop is at $8.10 and target is $16.00.
The profit potential on the Oil recovery and these picks are really, really good and it is going to be fun to update them. I’m looking forward to it and will provide a few updates per week.
Stay tuned…
Would you mind paying more for gas at the pump, if you were able to make massive profits in Oil related trades? If we play this right, not only can we buy all the gas we want, we might just be looking at a brand new car!
In my last update, a few days ago, I said that if Crude Oil futures went up through $37.09 with some good momentum, then that would be a clear signal that the recovery in Oil was underway.
Well, it happened and I stand by my analysis. I think the Oil recovery is a go.
There are several ways to trade the recovery in Oil. Of course, you can just go long on the futures contract, but that takes a pretty large account to hold contracts overnight and beyond. And it carries more risk. I am trading Oil with stocks and ETF’s.
WLL (Whiting Petro) is an Oil related stock that I like a lot. It is low priced but trades with really big volume. I’m looking at an entry of $8.57, with an initial stop of $3.33. If WLL moves with Oil, as it has done so far, we could be looking at a 2X or 3X trade in a relatively short timeframe. Works for me!
If you don’t like low priced stocks, USO (Crude Oil ETF) might another way to play this. I’m looking at an entry of $10.25, with an initial stop of $8.13. USO has huge volume and a very active option market as well. Whatever option strategy you like for a bullish trend play should do really well.
I’ll continue to provide updates a few times a week. I’ll update the price pattern on Oil Futures, the two trades that I called out here, and I’ll add a few more plays as this works its way out.
Stay tuned…
It’s no secret that Oil has been in a massive decline. From over $120 per barrel in 2012 to less than $30 in 2016.
The big question is, “what’s next?” Will Oil continue down or will it head up? If we can correctly call the correction in Oil, we can get some REALLY profitable trades! But if we jump in too soon and are wrong, we lose.
Some simple technical analysis can give us the answer. We don’t have to load our charts up with too many whizzy indicators to read this one. Simple Dow Theory, with a simple Elliott Wave count can give us the answer.
Recall what Dow theory says; “a down trend is defined by Lower Lows and Lower Highs.” We’ve seen that for a long time on Oil. When that pattern is broken, when we take out a Lower High and put in a Higher High, that means something, it usually signals a change in trend, or at least the beginning of a corrective movement.
Elliot wave says that price moves in a series of impulsive and corrective waves. Elliotitians can argue all day long about the specifics of wave counts, but there is no debate that Oil has been in an impulsive Bearish wave for some time now. At some point, we will get a corrective wave up. Dow theory can signal when that is happening.
When (not if!) the corrective wave begins, then the current Fibonacci range for that is 38.2% – 61.8%, or $62.97 – $84.87 on the Crude Futures Contract. That is a massive move from current prices and there will be some REALLY good trades in Oil Futures, ETF’s and Oil related stocks.
Does this method of analysis work? Well, nothing is perfect…but using the same technique, we called the recovery in Gold. We said that when Gold futures crossed $1113, the recovery was on—and man is it! Oil could do the same thing. If it crosses $37.09 with authority and momentum (not just a few ticks,) then Oil is on as well.
We’ll provide regular updates as this plays out and if the recovery begins, we will call out some specific trades.
Stay tuned…
Why do so many investors and traders continue to fail to let their profits run and cut their losses short?
The answer is clear…They have not learned the market-beating secrets of Trend Analysis!
Some of the most successful investors in history have used simple trend trading to make fortunes in the markets. The trend is your friend and trend analysis should be a crucial tool in your trading arsenal.
Trend analysis attempts to predict the future movement of a stock based on historical data with the underlying assumption that what happens in the past gives traders an idea of what will happen in the future.
In technical analysis, it is the movement of the highs and lows that establishes a trend. For instance, an uptrend is classified as a series of higher highs and higher lows, while a downtrend is as series of lower lows and lower highs.
Of course it’s essential that you do it correctly and I can show you how to do that. I’ve created a simple and free 7-minute video training called “Identifying Profit Making Opportunities with Trend Analysis.”
On this short but highly informative video, you will discover the following trend analysis secrets…
It is essential that you understand and are able to identify trends so you can trade with rather than against them. If you want to learn how you can gain huge advantages over all the other investors in the market, then watch this video. Learn how you can combine simple candlestick analysis with trend analysis and never be shaken out of a great trade again.
We hope that you enjoy the video and that you will read more of my blogs for educational purposes as well as read my daily market comments to help you maneuver your way through the markets.
Thank you for reading and Happy Investing!
Stephen Bigalow and The Candlestick Forum Team
P.S. Stephen Bigalow offers weekly free education to all subscribers as well as additional education for paid members. Candlestick Forum realizes that there are a variety of trading tactics that can be a helpful part of your trading arsenal, so Stephen invites highly respected members of the training community to provide additional training to his list of loyal subscribers. Please view The Candlestick Forum Events Calendar to see what is available in the weeks to come.
Stephen W. Bigalow possesses over twenty-five years of investment experience, including eight years as a stockbroker with major Wall Street firms: Kidder Peabody & Company, Cowen & Company and Oppenheimer & Company. This was followed by fifteen years of commodity trading, overlapped with twelve years of real estate investing. He holds a business and economics degree from Cornell University, and has lectured at Cornell and at many private educational investment functions over the past twenty years.
Mr. Bigalow has advised professional traders, money managers, mutual funds and hedge funds, and is recognized by many in the trading community as the “professional’s professional.” He is an affiliate of the “Market Technicians Association”. (mta.org – A non-profit association of professional technical analysts) and a member of AAPTA, the American Association of Professional Technical Analysts. (aapta.us)
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