Two weeks ago, I recommended going long oil because it is in a bull market, regardless of the fundamental bearish views. Crude Oil price is as much affected by movements of the USD as it is by fundamental considerations. With this in mind, the price got overextended at 50$ and was due for a pullback. At this point a few months ago, I recommended going short oil, but I hadn't decided on an instrument to use, and I don't like shorting a bull market, so I waited.

From TA, I knew that the 50% fibonacci retracement of Crude's bull move this year was around the 40$ area. Two weeks ago, I recommended and bought UTWI, a triple leveraged ETF of the crude oil prices. The price bounced around for a few days and then exploded higher last week and today.

The two charts below show the long term technical markers that I used to make this call.

Confluence

Long term Support Line, Price Extended below Moving Averages and due for a return to the mean, Fibonacci retracement 50% hit at 40$ + my fundamental belief that the falling USD will cause a rise in Crude Oil Price.

Chart #1: Monthly SR levels

Chart #2: Weekly Fibs

Conclusion

Based on the above two charts, oil has a long way to go up. Opec is talking about a production freeze and this will justify the price moving up for the short term. However, the freeze won't happen because Opec has no influence anymore and can't afford to decrease output themselves. It is probably safe to stay long Oil until the day before Opec makes its official decision. At this point, there will probably be another pullback. I'd expect oil to go up to previous resistance in the 60$ range at which point Opec will announce ''no freeze''. Oil will then drop back down to its new support at 50$ and EVERYONE will be saying that it is going to drop. But it will bounce off 50$ and go up again.

Keep in mind that many things can change and my analysis may change with current events. I read the price movements and they can reverse quickly.

If you had any trouble understanding the terminology used in this brief analysis, refer to my original post: ''How to'' on Technical Analysis.

I hope you enjoyed. Feel free to upvote, comment and share! Thanks
-JT