HO is setting up like Crude did a few days back.

NYMEX:HO1!   NY Harbor ULSD Futures
Here is the setup:

1 - Commercial Traders net position ranks 92% on a 18m basis - They have been buying heavily into this decline. Trend following Hedge Funds on the other hand score a very weak 21% so they are still extremely short even after this 30 cent wipeout. Once the technicals start turning, their algo's will be covering to lock in the sizeable gains on their shorts.

2 - Seasonality is very favorable for HO - Going back to 1979, HO sports a impressive winning % of 66% in the month of July.

3 - Crude has been rallying & turning trends neutral from down - HO followed suit today with the convincing move through the Down trend line that has been in force from the 1.63 range.

So we've stopped falling, and now a counter trend rally has begun.

How to trade it:

For trend reversals we like to see a test of the low, and then a higher low made - We can use that as our pivot point .

Wait until after the EIA report tomm so that you sidestep any bankster fleecing/stop running & then look to establish your long position.

A 50% FIB retrace of this sizeable decline gets us to 1.50 or 8.5 cents from here - A lot of room to run, even if a higher level bear market is still in play.

Good trading to all.

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