On February 24th I wrote an article suggesting that a small pullback that remained over $51.23 would set up a very nice risk to reward opportunity in Crude Oil, with a minimum price target of $63. On March 8th Crude Oil provided us such an entry into a long futures position and shares of ProShares Ultra Bloomberg Crude Oil (UCO) at the .50 Fibonnaci retrace level. For those following us in our live room we went long shares of UCO at $18.52 per share on March 8th, and are currently up 34% on this position and still looking for higher. We have now raised our stop out level to ensure substantial profits, but are still looking higher.
While this is only an intermediate position trade, let’s take a look at what is in store for investors who are willing to take intermediate positions either long or short crude oil using futures or ETFs. First, let’s begin by looking at the Crude Oil Weekly Chart below.
Crude Oil Weekly Chart
We are viewing the pattern off the 2016 low in Crude Oil as a completed A-wave of a much larger A-wave, and are currently in an ABC for a B-wave with the next downside target in the $39.39-$32.84 region. However, the blue B-wave is not complete and we still anticipate continued upside into the $67 - $73 zone before the larger move down commences. The ideal upside target before a move down commences is in the $68.79-$73.02 region.
We will be exiting long positions at the next major high into the $67/$68 region and gearing up to take shorts in Crude Oil.
Crude Oil Daily Chart
For those who missed this move up, there are plenty of great opportunities to position both short and long in Crude oil. Case in point, we anticipate approximately $30 of downside in the next major move, which is significantly greater than the present move up.
At this moment in time, immediate support is $62.43, and if Crude Oil breaks this level, the next downside support is $60.98, which would begin to suggest the upside targets are no longer likely, and that the top is in and Crude is heading to the lower target levels.
In conclusion, Crude Oil still has some more upside into the $67-$73 region before turning down to take out the December 25th low. Once the top is in, we anticipate a move to the $39 region, and possibly as low as $32.50. Investors seeking to participate in this move down should be patient and await the sooner of a break of support or the higher targets to be hit before shorting.
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Disclosure: I am/we are long UCO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.