Anticipating a Move in OIL

In this post I am going to make the case for the early building of a position to take advantage of a decline in the price of Oil. One was to do this is through SCO (ProShares UltraShort DJ-AIG Crude Oil). In the following chart, you can see that the RSI is skipping along the 30 level (Oversold) and the Stochastics reading is coming in for a landing. Price is trying to find some footing here above the 40 level:

As you can see there is a Double Top that completed in early October and has since swiftly declined to the present price level as Crude has moved up in price near the all important psychological $100 price point.

If you have the view that price does stall here for Crude, then the play here is to start building a Long position in SCO.


4 thoughts on “Anticipating a Move in OIL

  1. How are you going about this? I noticed that Nov Max Pain is $44 but that seems a bit overambitious(great if it could go there but I’m not pinning my hopes on it). So I’ll ask you since I value your opinion.

  2. For now I have Price Alerts set in a range of 40-42 and want to see if the brakes really are on here. Oil will have a tough time cracking 100 so it looks to be a good time for planning a Long in SCO.

  3. Thank you for your reply. Am I correct in assuming that you’re doing this as a straight buy and not an options purchase?

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