The WTI Crude Oil markets rose during the course of the session on Tuesday, but pulled back from the $105 region to form a shooting star. While the shooting star formation is very negative, I believe that it simply shows that the market isn’t ready to breakout quite yet. After all, we had a very significant move on Monday, so one would have to wonder whether or not there were going to be enough buyers left to break this market above such significant resistance.
It doesn’t matter to me though, I think this simply gives is one of two options: either buying the pullback on a supportive candle, or buy on a break above the top of that shooting star. Both are very bullish signs, and I do believe that the ascending triangle that we are forming suggests that we are in fact going to go higher given enough time. With that, I am not interested in selling this market anytime soon, and would have to wait until we broke well below the $99 level in order to even consider it.
Long-term call options.
One of the best strategies in plain this market I believe is to buy long-term call options, or sell put options. It doesn’t matter though, it just simply matters what market you are comfortable with. A larger account can go ahead and buy futures contracts, but that does get a little bit expensive for a lot of traders. Ultimately, I see absolutely no way to sell this market anytime soon, and if you have the wherewithal and the trading capital to sit upon a position, then that’s fine. However, look at the CFD markets as a possible opportunity as well. It will allow you to tailor the size of your position.
Ultimately, I believe that this market goes to the $110 level, but quite honestly the basic measurement of the triangle suggests that we are going to go higher. In fact, it suggests that we are going to the $113 level given enough time. I think there will be plenty of pullbacks between here and there in order to get involved on the buy side, making this a very profitable market this summer.
