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Today’s Trading Edge: Oil consolidates ahead of June 5th OPEC meeting.

 

WWM US OIL JUN 1 2015

Oil has retreated after advancing in May to a near 6-month high of $62.58.  Price is currently consolidating ahead of this week’s June 5th OPEC meeting that will determine output for the next six months.  Expectations are high for OPEC to keep its policy steady and keep production high. 

The 240-minute oil chart displays the recent slightly downward consolidating channel that has been forming since making the noted high.  If the recent rebound is able to break above the upper boundary of the bearish channel, price may see a clear path towards the $62.00 region.  Further resistance may come from the $64.23 level which could also from a bearish ABCD pattern.  A daily close above $66.33 would invalidate the reversal pattern and could open the door for a rally to ultimately target the $70 handle. 

If downward pressure gains strength and breaks below the bearish channel, we could see price target the 100-day SMA which is currently trading at the $52.31. 

The trade: Sell oil at $62.50, with a stop loss at $64.50 and take profit at $56.50.  The risk/reward ratio is 1:3

Edward J. Moya

Senior Market Strategist

WorldWideMarkets Online Trading

Forex Trading Demo
 


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