Betting Against Oil is Like Swimming With Sharks

• Posted by Greg Harmon
• on October 9th, 2014

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Crude Oil has had a horrible 4 months falling nearly 20% per barrel. There are all sorts of reasons floating around for it. Even the technicals in the price chart have looked awful. Except for one.

The chart above shows one perspective of why West Texas Intermediate Crude (WTIC, $USO) may be ready for a reversal. The pattern drawn out is known as a bullish Shark harmonic pattern. Despite the move lower it is a bullish pattern because it looks for a reversal higher. The criteria are a completion to point D or lower, and then a single candle that moves back up through point D. Some look at this like all technical analysis, some art some science, and give it some wiggle room on the single candle trigger. But a reversal that moves back above 89.60 would call for a continuation higher to either the 38.2% retracement of the pattern or the 61.8% retracement. This is up to 94.79 or even nearly $100. There is a fundamental narrative developing that may aid this turn as well. One of the reasons for falling prices has been the rise in supply from fracking. The story making the rounds now is that a move lower will start to shut down fracking as it becomes unprofitable. This of course would shrink supply. I have no idea if this is true or not but sentiment matters. And any catalyst can trigger the reversal. Are you prepared?

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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