Oil has indeed recovered from the key support, and our decision to open long positions became immediately profitable. It's up to the bulls to prove their mettle right now - how far can they take the oil price? Let's consult the charts and assess the unfolding move's veracity.
On Wednesday, crude oil hit our binding exit target, which means that our short position in crude oil was closed and consequently, you took profits off the table (that is if you chose to follow us on that trade). And yesterday we switched sides and provided you with detail for the next long trade. Crude oil declined a bit below our entry price, thus triggering the earlier prepared long position, and the position became profitable almost immediately. At the moment of writing these words, crude oil is rallying after yesterday's reversal, and profits are rising.
See the chart for more details.
Yesterday's intraday low was $51.01, but crude oil stayed below our predefined entry price for less than 2 hours. This was more than enough time to enter the position manually, but it would have been more convenient to simply enter a waiting buy limit order that would be executed at the specified price that our subscribers knew about in advance.
The shape of yesterday's session is in tune with the bullish case that we outlined yesterday. It took the form a daily reversal and black gold is rising today, confirming its validity.
Our yesterday's comments on the above medium-term crude oil chart remain up-to-date:
The rising medium-term support line was just reached and the strong support provided by the previous lows and the 61.8% Fibonacci retracement level based on the 2018 - 2019 upswing is just a bit over $1 lower than yesterday's closing price. This means that the short-term decline is likely over or very close to being over.
That's based on the price moves. Now, considering the aspect of time, we get another indication that at least a brief turnaround is likely. Crude oil has been declining relentlessly for the past 7 trading days. There was no similar case when that happened in 2019. The most recent similar case is when crude oil declined in the fourth quarter of 2018. Interestingly, it happened at relatively similar price levels. The red rectangles that we used to mark the above are identical. If crude oil declines to $51 here, the size of the relentless declines will be practically identical. And history tends to rhyme.
That's exactly what happened. Crude oil declined to $51.01 and the sizes of the declines are practically identical. At least a short-term rebound is now likely.
The Stochastic indicator just flashed a tiny (but still valid) buy signal which serves as an additional confirmation of the current bullish move.
Consequently, in our view, the current long position is justified from the risk-reward point of view.
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Thank you.
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits - Effective Investments through Diligence and Care
