Gonçalo Moreira, CMT
Independent Analyst
- All of oil's price action of the last two weeks can be viewed as an Adam and Eve a variant of the double-bottom, which makes for a potentially powerful upside reversal;
- With a breakout signal above 37.80 in WTI and 39.39 in Brent, traders would feel more confident that serious inroads to the 40/45 levels could be achieved;
- Minimum upside objective of the aforementioned chart formation is 41.30 in WTI and 42.85 in Brent, price levels which will intersect mid January with the downward sloping resistance lines from the June and October highs;
- In view of this high profile bottoming process, recommended is the accumulation of call options in oil as a rebound looks very much on the table;
- Outright positions can be initiated at the breakout levels or ideally in retracements. Do not dismiss the bearish long-term outlook and close positions in case a retracement in WTI goes lower than 61,8% of the patern's range (approx. 35.77). Brent, in turn offers an early positioning because its current quote is well below the signal line and has therefore a lot of ground to claim.
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