WTI up trend or down? Setup for selling continuation into high
What is WTI trend right now?
WTI is in a down trending mode now so selling is the right thing to do. The next right thing to do is to sell high buy low i.e. at the end of a retracement.
WTI is doing this retracement right now. As we can see, price made a new low in March, itself the climax of a 9-month long fall from the heady levels in the 100 plus region. That upward move in the second half of March and mostly this month is in my opinion retracing some of earlier losses without changing trend. With this picture in mind, I follow a simple rule:
Down trend is a series of lower highs and lower lows. No new high, no bullish reversal.
What kind of sign for a WTI bullish reversal?
On the other hand, WTI is coming near to a critical zone where there is potential for a bullish reversal. This zone painted in olive green separates a continuation pattern from a potential double bottom VV bullish reversal. The zone is bound by 2014-low and 2015 high (see ↑ for values). Above this zone, price makes a new high and out goes the window my simple rule for trend following.
Sell into high we must
I have another simple rule:
A trend continues until broken; don’t anticipate.
That makes that olive green the best zone to sell high, buy low because retracement gives bears a better price.
From the daily chart, a number of confluence factors support selling:
- An equidistant channel (red) defines WTI price movement. According to these lines, price is now approaching resistance.
- An extended trend line (blue dotted) shows price heading into a pullback zone.
Since this is a very good level to take action, the last things a trader could do is to wait for a good selling signal from price action and to buckle down for the ride with a robust stop loss order.