Hey Gang,
Over the past several months, we have been witness to a historic slide in oil prices. While we can’t complain when we arrive at the pump…let’s take a look at it from an investment standpoint.
Below are 2 charts. The 1st is a 20 year look at oil. The $40.00 price level was as major long term resistance level for years. There is a high probability that it turns into support and we are fast approaching.
The 2nd chart is a daily view showing a sharp downward channel. Sharp channels are normally broken with a strong countermove. Often times the end of the strong trend occurs after several days of heavy volume.
A look at both of these charts gives an arguement for a bounce in oil. I am not saying that this is the bottom and oil will go on a big uptrend from here…but rather…the $40.00 mark is a logical place for oil to stop its freefall and a logical place to cash out on any puts or short positions.
Happy Trades,
Jeff
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