After EIA’s modestly bullish inventory report came out, yesterday, WTI dithered for a moment before heading higher. I was prepared to throw in the towel on our 42.11 downside target when its rally reversed at the exact price it needed to in order for me to quickly regain my confidence.
The yellow arrow marks the Head & Shoulder Pattern‘s neckline that we laid out last week [see: Oil’s Dangerous Game.] Three hours later, we bagged 42.11 and saw CL reverse as expected. The bonus: it led SPX right to our downside target for it, as well.
This completes a pretty nice short that tested us over and over again with three separate head fakes, an aborted bounce on a channel line, and another on the neckline.Do the fundamentals support a big rebound here? Nope, not even close. But, fundamentals have paled in significance to technicals and chart patterns for over a year. And, if I’m right and central bankers get their way, they will continue to do so.
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