Risk, Reward Favors a Downturn in Oil

We are very much aware of the recent incredible surge in oil prices. Although, we still maintain our medium term outlook of lower oil price due to ongoing global slowdown. However, we are not also oblivious of the current outlook that there is a significant bullish bias in oil at least on the shorter term but currently from a risk, reward perspective we are tilting to a short term downward price pull.

Technically, the price is brushing off the resistance area of the shorter-term upward channel on the 15-minute chart [see m15 Chart]. Traders can look to take advantage of this risk, reward palatability by shorting the WTI/USLight Crude/USOil (all interchangeable names).

Fig 1: 15-Minute (m15) WTI/USOil/Chart

 

WTI/USLight Crude/USOil

Sell @ current market price (instant execution)

Stop: 6300

Limit: 6085

It should be noteworthy that there are no fundamental basis for our aforementioned outlook, it is solely based on risk, reward worthiness and palatability from a technical vantage point. The current fundamentals with supply squeeze clearly favors the upside in oil prices, hence traders should be highly aware of the risk by using their stop-losses.

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