Brent crude oil sends a strong reversal signal
The doji pattern that the Brent crude made yesterday sends a strong signal that the extended downtrend has run out of steam; buying the futures at current market levels provides great opportunities on the upside.
Yesterday it was a dynamic day for the Brent crude oil for October delivery, COIL1014. It was first sold off to $96.70, a major support matching the low from 18 April 2013. Afterwards, it bounced strongly from that level for a daily close at $98.16. As a result, a doji reversal pattern was formed.
The RSI (14) is currently at oversold levels, which adds to the evidence that COIL1014 might have already bottomed at $96.70. Of course, it is always a good idea to wait for a confirmation of the doji on the next day after the pattern has been present, but we personally prefer to buy into crude right now instead of missing from the rally.
Bear in mind that the COIL1014 is expiring today, so longs will need to be opened on the next futures, COIL1114. Stops below $96.70 are highly recommended. Our personal preference for stop orders on crude oil is to wait for a daily close below the long-term support to close our long position. Profits, in our view, should be taken above $106.13, the 0.5 Fibonacci correction of the fall from $115.61.
This article expresses the opinion of Profitease.com, which is based on chart observations. It should not be taken as advice on buying or selling any financial instrument! Profitease.com does not accept any liability for losses or other damages endured as a result of using this article for trading purposes!
