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O'Hare: Trading a bounce in oil

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December 02, 2014 commodities, commodities markets, commodity, commodity index, commodity investing, commodity market, commodity outlook, commodity prices, commodity strategy, commodity trade, commodity trading, crude, crude oil, crude price, oil, oil and gas, oil industry, oil market, oil price, oil prices, oil production, oil spread, oil stocks, oil supplies, oil supply, oil trading, saxo, saxo bank, saxo bank saxo tv, saxo bank trading floor, saxo bank tradingfloor.com, saxo tv, saxo tv saxo bank, saxo tv trading floor, saxo tv tradingfloor, saxo tv tradingfloor.com, saxobank, saxotv, stocks, trade idea, traders tale, trading, tradingfloor, tradingfloor.com, tradingfloor.com saxo tv
Steve O’Hare is trading January WTI crude oil. Yesterday prices moved to the lowest level in over five years but price action reversed quickly higher. This resulted in 9% rally, from the low of 63.75 USD, towards the 38.2% Fibonacci retracement level of the overall move lower at 69.10 USD. This was the biggest one-day gain in 2 years. 

According to Steve the drive higher was due to profit-taking assisted by an aggressive bearish move in the dollar. Steve remains bearish on oil but argues that there's scope for further upside without impacting on the downward trend. 

The move formed a bullish engulfing candle on the daily candle stick charts and a higher close today should confirm the upward potential. The intraday chart also looks bullish and in the early stages of a reverse head & shoulder pattern, which could result in a full retracement back to mid-November highs. 

Steve is looking to buy on a break of 69.75 USD. His targets are the 61.8%  Fibonacci retracement at 72.42 USD, which also is the November Marabuzo level. If the reverse head & shoulder forms there is a possible measured move towards 76.00 USD. Steve places his stop on this trade on a break back below 67.50 USD. 

Trade idea parameters
Period: 1-2 weeks