Bearish Pattern For Oil

Alexandros Yfantis • May 18, 2018 at 6:16 AM EDT

Oil prices are trading inside a rising wedge pattern.

Oil prices are trading inside a rising wedge pattern. In the chart below we also observe the bearish warning signs by the RSI divergence in the 4-hour chart. Support is at $70. A break below it will confirm the wedge is broken and we should at least pull back a couple of $$.

However, I can see another new higher high from a bounce at $70.50 - $71 and then the break of the wedge for a pullback towards $68 - $69 minimum. Resistance is at $73 - $73.50 so a move towards the upper wedge boundary could be a nice short-term bearish opportunity.

(Click on image to enlarge)

What trades can be initiated?

Short near $73 - $73.50. Tight stop, playing the rejection from the upper boundary.
Short on a break of $70. Playing the wedge break down.
Long near $70.30 with $70 - $69.70 stop targeting $73. Strategy wants the price to continue to respect wedge boundaries for new highs.

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