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$WTIC (Crude Oil) Bearish Rising Wedge Pattern

As a follow-up to the recent USO / UTWI trade idea, here's the daily chart of $WTIC (Crude Oil spot price) showing the same bearish rising wedge pattern, along with some key support & resistance levels. Should my call for a drop in crude prices play out as expected, that would almost certainly bring down the energy stocks & related ETFs such as XLE & XOP (and likely US equities in general) down along with it.

$WTIC daily May 26th

$WTIC daily May 26th

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May 26, 2016 11:08am|Categories: Completed Trades - Short, Gold & Commodities|Tags: , , |8 Comments

8 Comments

  1. covey May 26, 2016 11:39 am at 11:39 am

    We got stopped out of XLE with yesterday’s close above 67.30. Will you be considering adding it as a new short with a breakdown of that bearish rising wedge on USO?

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  2. rsotc May 26, 2016 12:04 pm at 12:04 pm

    covey, Yes, I am considering another XLE/ERX official short trade although I’d first like to see if I can sniff out any stand-out setups on individual energy stocks first, now that earnings season is winding down. I’d also like to see a little more confirmation for the near-term bearish case in both crude & especially the equity markets, such as a reversal that wipes out all of Tuesday’s gains. Until then, I’d prefer to be very selective on any new trade entries, long or short.

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  3. Shambo May 26, 2016 1:37 pm at 1:37 pm

    Randy, thanks for posting this USO trade — it was a great entry on several time frames and its got a nice tight stop. Lately I’m just waiting for these high probability low risk trades and not pushing anything. Nice one.

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    • rsotc May 26, 2016 2:23 pm at 2:23 pm

      YW @shambo . You hit the nail on the head: Waiting patiently for high probability/low risk trades with attractive R/R profiles (and if I could add, waiting for the trade setups that align with one’s own trading style, risk tolerance, etc..& passing on those that don’t). I often find the less I trade, the better my bottom line. Like any trade, this one may or my not pan out but it certainly looks objective to me. G-luck!

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  4. j1persi May 26, 2016 3:47 pm at 3:47 pm

    What is your target for WTIC?

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    • rsotc May 26, 2016 4:16 pm at 4:16 pm

      @j1persi – My target for $WTIC would be those two support lines just below the blue arrow although as those levels are in such close proximity that I’d refer to that as a ‘support zone’. Those levels come in at 42.63 & 42.47 although keep in mind that I don’t believe that one can trade spot crude prices, rather you’d need to use CL (crude futures) or an ETF such as OIL or USO. My comparable pullback target on USO is the T2 level (final target) from the USO/WTIC short trade posted earlier today, which comes in around the 10.70 level (price target set slightly above at 10.77 to help increase the odds of a fill, should crude reverse just shy of the actual resistance level). Let me know if you have any other questions. -Randy

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  5. joefriday May 26, 2016 7:29 pm at 7:29 pm

    Can’t tell from the chart..but at what price is the bottom of the wedge broken? Looks to be around $48.50..?

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    • rsotc May 27, 2016 8:42 am at 8:42 am

      jf- As of today, the trendline that defines the bottom of the wedge would come in around 48.70 but as the trendline has a positive slope, that level comes in higher each day. Keep in mind that this $WTIC chart is an EOD (end-of-day) chart, meaning that prices are only updated once per day, after the close of trading. Here’s a link to the chart which should refresh/update each time you open it (although the prices are only updated daily). http://schrts.co/tWL8z7

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