On the monthly chart, you can see that oil is currently hitting a major support zone. I placed the fib a bit unconventionally however this is where it snaps the best. If it holds up, it gives us a target at 100-123% fib zone.
Reasons to long:
1. Price Action: We see the price responding to the key supporting trendline and 78.6 fib. Wicked below it and closed above in December.
2. Fib: Found possible support at 78.6
3. Pattern: Triangle that closely resembles a symmetrical triangle. Currently at the bottom of it.
4. Volume: The volume in November signals high probability of capitulation. December sell volume was much less.
5. Risk Reward Ratio: 10 with a 135% profit at the first fib target (100% fib). The more aggressive trader may set a second target around 123% fib.
Reasons to NOT long:
1. Indicators: OsMA and Stoch are still bearish (lagging indicators)
2. Moving Average: Below 30 month moving average.
Reasons to long:
1. Price Action: We see the price responding to the key supporting trendline and 78.6 fib. Wicked below it and closed above in December.
2. Fib: Found possible support at 78.6
3. Pattern: Triangle that closely resembles a symmetrical triangle. Currently at the bottom of it.
4. Volume: The volume in November signals high probability of capitulation. December sell volume was much less.
5. Risk Reward Ratio: 10 with a 135% profit at the first fib target (100% fib). The more aggressive trader may set a second target around 123% fib.
Reasons to NOT long:
1. Indicators: OsMA and Stoch are still bearish (lagging indicators)
2. Moving Average: Below 30 month moving average.
My goal is to find the best risk:reward setups. For instance, if you risk $1,000 at a chance to make $5,000, you can afford to be wrong 4 out of 5 times and still not lose money. I hit my targets over 50% of the time.