Oil Deals Us An Instantly Profitable Rebound

October 4, 2019

Oil has indeed recovered from the key support, and our decision to open long positions became immediately profitable. It’s up to the bulls to prove their mettle right now – how far can they take the oil price? Let’s consult the charts and assess the unfolding move’s veracity.

On Wednesday, crude oil hit our binding exit target, which means that our short position in crude oil was closed and consequently, you took profits off the table (that is if you chose to follow us on that trade). And yesterday we switched sides and provided you with detail for the next long trade. Crude oil declined a bit below our entry price, thus triggering the earlier prepared long position, and the position became profitable almost immediately. At the moment of writing these words, crude oil is rallying after yesterday’s reversal, and profits are rising.

See the chart for more details.

Yesterday’s intraday low was $51.01, but crude oil stayed below our predefined entry price for less than 2 hours. This was more than enough time to enter the position manually, but it would have been more convenient to simply enter a waiting buy limit order that would be executed at the specified price that our subscribers knew about in advance.

The shape of yesterday’s session is in tune with the bullish case that we outlined yesterday. It took the form a daily reversal and black gold is rising today, confirming its validity. 

Our yesterday’s comments on the above medium-term crude oil chart remain up-to-date:

The rising medium-term support line was just reached and the strong support provided by the previous lows and the 61.8% Fibonacci retracement level based on the 2018 – 2019 upswing is just a bit over $1 lower than yesterday’s closing price. This means that the short-term decline is likely over or very close to being over.

That’s based on the price moves. Now, considering the aspect of time, we get another indication that at least a brief turnaround is likely. Crude oil has been declining relentlessly for the past 7 trading days. There was no similar case when that happened in 2019. The most recent similar case is when crude oil declined in the fourth quarter of 2018. Interestingly, it happened at relatively similar price levels. The red rectangles that we used to mark the above are identical. If crude oil declines to $51 here, the size of the relentless declines will be practically identical. And history tends to rhyme.

That’s exactly what happened. Crude oil declined to $51.01 and the sizes of the declines are practically identical. At least a short-term rebound is now likely.

The Stochastic indicator just flashed a tiny (but still valid) buy signal which serves as an additional confirmation of the current bullish move.

Consequently, in our view, the current long position is justified from the risk-reward point of view.

If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Oil Trading Alerts to also benefit from the trading action we describe – the moment it happens.  Check more of our free articles on our website – just drop by and have a look. We encourage you to sign up for our daily newsletter, too - it's free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up for the free newsletter today!

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Przemyslaw Radomski, CFA, is the founder, owner and the main editor of SunshineProfits.com.

During 1500s the Spaniards had taken 16,000,000 kilograms of silver from Peru.