The monthly chart shows that Oil has broken above the strong resistance of 82.70 and is pulling back for a retest. On the chart, you can see this month’s strong ongoing pullback from 94 and that the upside support goes all the way to the 77-78 zone. This is viewed as the fourth wave pullback and we need to see a bounce from this level to confirm the upside extension.
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The Weekly Oil chart reveals the uptrend channel is formed and a confluence for the horizontal support along with the uptrend line support. A break below the 78 is required to invalidate the upside extension and denies the fifth wave continuation higher, but Oil has a lot of support for bulls which makes the downside reversal and invalidation a low probability.
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As the famous trader says…
“Hope is bogus emotion that only costs you money.”Jim Cramer
How to trade this?
It is a fact that a strong upside support for Q4 is 77. If we get a confirmed bounce from here and a break above the 86 we could see another test of 95. Near-term, long-trade entries have a higher probability of success. We can open the long trade here with a bit of risk and stop the loss below 76. You can trade this price action with the options as well.
