Chart Of The Day: After OPEC Resists Output Increase, Where Next For Oil?
Investing.com | Sep 25, 2018 10:01
OPEC and its oil-producing allies, have—at least for now—resisted US President Donald Trump's calls to increase output, and have instead elected to keep production levels steady. This decision was made even as the supply outlook has sharply decreased due to the sanctions against Iran which officially begin in early November.
The news caused oil prices to open 1.19 percent higher Monday. The rally extended to a 1.99 percent gain by closing. Today, the price has climbed another 0.43 percent so far. How much higher might WTI prices go?
Yesterday, the price opened above the neckline (which is the line drawn across the highs of the two recent peaks, marking the border of an H&S bottom), thereby completing the pattern.
The H&S bottom depicts the previous downtrend in which the head continued to the level of the left shoulder. However, the right shoulder failed to register lower than the head. Instead, it climbed higher. The peak above the neckline completes a midterm reversal (in the long term it was still considered an uptrend since the early 2016 bottom).
The price target is measured by the shortest part of the height of the pattern and is $6.67 from the point of the breakout above the neckline, making the target about $78.
h3 Trading Strategies – Long Position Setup/h3Conservative traders who should generally wait for a minimum 3 percent penetration to avoid a bull trap may consider waiting for a long-term fresh peak, above the $75.27, July 3 high, confirming the long-term uptrend and avoiding its resistance.
Moderate traders may enter with a third day close above the neckline or with a close above $73, which would satisfy the 2 percent penetration guideline to avoid a bull trap.
Aggressive traders’ requirement for a minimum 1.00 percent penetration has been already satisfied on Monday.
Conservative Trading Sample:
- Entry: $75.00, after posting a peak higher than the level reached in July.
- Stop-loss: $74.00
- Risk: $1.00
- Target: $78
- Reward: $3.00
- Risk-Reward Ratio: 1:3
Moderate Trading Sample:
- Entry: $73:00
- Stop-loss: $72.00
- Risk: $1.00
- Target: $78
- Reward: $5.00
- Risk-Reward Ratio: 1:5
Aggressive Trade Sample:
- Entry: $72.50
- Stop-loss: $72
- Risk: $0.50
- Target: $78
- Reward: $5.50
- Risk Reward Ratio: 1:11
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.