If there’s one trade that is worth looking at, it will be Crude Oil.
As 2014 closes, crude fell from $115 to around $40 since June.
News outlet begin reporting about possible reasons:
- Price war from OPEC
- Too much supply in the form of shale oil from US
- Weak demand
A common theme I heard from fellow traders is “it is now low enough to buy”. They said it at $80, and they said it again at $60. And again at $50 and the beginning of the year when the price is at $40s.
However, if we were to look at the chart and see how crude oil break down in June, what justification do we have that this is a good time to go LONG?
From the Ichimoku Daily Chart for /CL, we can see the following:
- Since last June, when it breaks support, crude has started on a bearish trend
- Towards end December, we saw some consolidation of price. However, is this a bear flag formation ‘in-progress’ ?
- From the Ichimoku chart, we can also see that it has hit the Chikou Span resistance twice
- The leading kumo continues to shows a huge resistance with no change in trend.
Based on the observation above, there is a high chance that we may see a downward movement towards the $40 next week.
