The last time we looked at oil, a barrel of the gooey black stuff was trading for about $51 – down about 15% from its Independence Day high near $60. We figured the price weakness was giving traders a chance to buy cheap oil just before the traditional pre-Labor Day rally.
Sure enough… Oil rallied about 10% over the next three weeks and bullish traders profited as “Big Oil” once again gouged consumers at the pump right in front of a summertime holiday.
Now, oil is setting up for another big move. This time, though, it has less to do about holiday-inspired price gouging, and more to do about the technical setup.
Look at this chart of West Texas Intermediate Crude Oil ($WTIC)…
This chart is forming a consolidating triangle pattern (the blue lines) – which is a series of lower highs and higher lows. This back and forth action, within a tighter and tighter range, allows all the various moving averages to coil together – thereby building up energy to fuel the next big move.
The chart is approaching the apex of the triangle pattern. So, we’re likely to see the price of oil break out of this pattern, one way or the other, within the next few days.
Which way will she go?
You might as well flip a coin. There’s no way to tell for sure ahead of time. The best strategy with these patterns is usually to wait for the breakout, and then place your bet in the direction of that move – because it’s likely to be a big move.
The height of the triangle, which is the distance between the support and resistance lines at the start of the pattern, is about $7. So, that’s the expected move in the price of oil once we get the breakout.
If oil breaks out to the upside of this pattern, then the target measures to about $63 per barrel. If the breakout is to the downside, then oil could drop to $50 or so.
Either of those moves could generate nice, quick profits for traders who catch it early enough.
Best regards and good trading,
P.S. On Wednesday, I said you should expect a short-term pullback in the gold stocks. Then, the gold market tanked 5% on Thursday…
With that move, there’s no doubt in my mind that the short-term direction for the gold market just shifted bearish. But here’s the thing…
Whether or not you’re invested in gold, there’s a way to capture profits from every upside AND downside move in the gold market.
It’s a specific technique I’ve refined for years. And on Thursday, I came forward to reveal it to the world. Watch the whole presentation here – but don’t wait. After today, it’s gone for good.