Jonathan Suen
Blackwell Global Investments Limited
How low can oil go? That’s a question I think about every time I fill up at the gas-station nowadays. The trader in me kicks in almost immediately after to ask the more pertinent question: How can I make money out of this downtrend in Oil? As simple as it is going to sound the answer is to trade the trend and not try to pick bottoms.
In Blackwell’s latest quarterly report available on our website we talked about how there is a clear bearish dominance across all timeframes.
We suggested good opportunities can arise on bearish continuation patterns. One such pattern is emerging yet again, the bearish flag/descending triangle (however you like to call it). Basically it is a series lower highs heading into a level of support indicating weakening of bullish pressure from an order flow perspective - note the 3 cases in point in the chart below.
The current pattern on the H4 Oil chart has the most volatile waves of the 3 with volatility squeezing to a point. Traders can look to trade a breakout pullback set up if there is an impulsive break out of the lows at around 44.34.
Fundamentally, the global crude oil market still remains oversupplied with U.S. Crude stocks at its highest January level in more than 80 years. Recent retracements in Oil have just been off the back of a weaker dollar. The U.S. Energy Information Administration is scheduled to release its Weekly Petroleum Status Report at 1030hrs ET, 27/01/15. According to The Wall Street Journal, 11 analysts surveyed all predicted gains by an average of 4 million barrels. This data release could give the push required for a breakout so keep this event on your calendar.
Forex and CFDs are leveraged financial instruments. Trading on such leveraged products carries a high level of risk and may not be suitable for all investors. Please ensure that you read and fully understand the Risk Disclosure Policy before entering any transaction with Blackwell Global Investments Limited.
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