Chart Of The Day: Oil Price Pops On Europe Ban, Momentum
2022.05.31 15:25
After months of indecision along with back and forth negotiation, European Union leaders finally sealed a deal early this morning that “aims to cut 90% of Russia’s crude imports into the bloc by the end of the year.”
The embargo against Russian oil will impact supply deliveries by sea, though Hungarian supply via pipeline will continue after that country’s Prime Minister, refused to fall in line alongside EU peers.
Nevertheless, the terms of the embargo were enough to push oil towards $120, for the first time since March.
With fundamentals aligning for potentially even higher prices, what are the technicals implying in terms of price trajectory?
Oil Daily
WTI completed a Symmetrical Triangle, whose development within an uptrend may create an upward bias. However, the pattern was difficult to read, reflecting the uncertainty of supply and demand.
Nevertheless, we maintain our bullish stance, identifying upward momentum as the likely driver given that the commodity just completed a bottom at the apex of the Triangle. That’s another bearish stronghold bulls conquered today.
Oil peaked above its Rising Channel, suggesting an accelerating up-trend. The price, should it hit $130, would be testing its highest levels since 2008.
Trading Strategies
should wait for the price to either return to the bottom of the Rising Channel or make new highs before considering a long position.
would wait for a return to the bottom neckline, if not the channel.
could enter a long position on the prospect of the Rising Channel’s breakout as a catalyst for a further rise.
Trade Sample – Aggressive Long Position
- Entry: $118
- Stop-Loss: $116
- Risk: $2
- Target: $128
- Reward: $10
- Risk-Reward Ratio: 1:5
Author’s Note:
