Candles, patterns, & EMA
We had 2 big red candle day : one of them below the average and next day above the average.
The 2nd day price closed below the 10 . When price is closing below the 10 in most of the cases the decline continues. So Wed was important: but look what happened with a very high we closed on the 10 without tagging the 20 . That was a sign to me . The following 2 days' has increased and bears were fighting hard shorting oil day after day but we were just crawling on the 10 without breaking it down again.
This time the resistance was the 300 from where we turned down every day.
Watching the and my EMAs oil is still to me.
From the main indicators the only weak is the . It crossed down and has divergencies.
left overbough but turned up from 50 which shows it wants to run to overbought again.
Slow seems wants to cross over again and enter into the overbought zone.
True strength index hasn't crossed over yet.
We are on day 23. The last cycle topped on day 28 and it was quite an early top. So we will have around 2 more weeks while oil will rally - even if we have 3 daily cycles in this intermediate cycle.
Summary : I still think oil will reach 50$+ in this daily cycle. I don't suggest to " bet the farm on it" buit you can use this as buying the pullback in the oil shares which can produce greater profit than going long in oil future contracts.
ERX looks beautiful, or as I mentioned the individual shares like CLF , SXE , VALE are looking good to buy again.
So when I set LONG in oil it doesn't mean I'm opening a long position now. I'm long since 30$. I'm holding my longs right now and i will post when jump out of them.
That might be our launch pad for the daily cycle top at 50$.
Should be reversing from here.
I hope now you understand why it is useless to try to short this market. When you jump into the short position the next day price just reverses and you are sitting in a nice loss...
Just as I predicted as soon as stocks starts to rally oil will follow.
So if I have to say a pattern I would say a double top or a cup &handle.
The problem even if it's breaking down there is a very little chance to get a follow through : we are at the half of this intermediate cycle.
So the worst could happen that we are entering a range between 42-46 for weeks. I will have at least one more possibilty (maybe 2-3 to exit at the top).
As soon as the dollar rally slows down and stocks start to rally oil will reverse immediately.
And I don't suggest short from here. If you afraid that your profit fades away you can close in some profit.
I'm still holding.