Swing trade opportunity for USOIL (2 MONTH HORIZON)

The current news headlines talk about the oil price war between OPEC+ and Russia. Long story short, Russia wants to punish shale oil producers from the US by increasing output. US producers have a breakeven price of 40 USD/BARREL. Saudi Arabia did not agree with Russia during during the OPEC meeting. So they announced an output increase themselves offering significant discounts to buyers. Leveraged US Shale producers themselves wil be forced to sell in the current prices by their creditors , in order to salvage any value available. High supply in combination with the coronavirus pandemic and the looming recession in the global economy lowers demand as well. In my opinion the fundamentals favor a short position as we will not see 40 USD/BARREL anytime soon.

Viewing the technical aspect of the trade we see that the 40 USD/BBL resistance has broken. We have a divergence in the MACD and a clear negative trend with consecutive red bars and increasing volumes in the Weekly chart. The following 8-10 months in my opinion we will see a breach of the 25.90 USD/BBL resistance so TP of 21.15 is advised. Having a 1:2 ratio of Risk/Reward (Loss%/Gain%) the SL should be placed to 35.25 USD/BBL.

Transakcja zakończona: osiągnięto poziom stop:

SL reached @35.25.

Komentarz:

I am preserving liquidity for my other ideas