Technical Analysis of Financial Markets

Sunday, August 17, 2008

Oil oversold at $110 ?

Having rallied 188% to all-time highs since Jan 2007; oil has retraced a third in value within the last month and is currently finding support at the 38.2% Fibonacci retracement level, coinciding with the 200-day moving average. With stochastics and RSI indicating oversold conditions, an entrance into a buy position may serve as a low-risk trade with a stop-loss on close below $110.

The UltraShort Oil & Gas ETF (DUG) is equivalent to twice the inverse performance of the Dow Jones U.S. Oil & Gas Index. An entrance into a short postion with a stop-loss on close above $40 may serve as a low-risk trade on speculation of rising oil prices.

1 comment:

Pawel Kaczmarek said...

Great content here.

I actually went bearish again on oil yesterday. Now that it's fallen more than $7 from yesterday's high, I feel vindicated.

My full thoughts here: