I want to provide an update on the WTI Crude Oil trade setup from May 28th "Crude Oil Update." Back on the 28th, I anticipated the formation of one of my favorite technical trading patterns, the head and shoulders.
Back then, I suggested we wait to see if the right shoulder formed before taking a short position in crude oil (USO, quote). Well, patience has rewarded us today with not only the formation of the head and shoulder but a convergence of the pattern with global fundamentals. Right now price testing the pattern and if it holds we should see crude oil price begin to move lower.
This afternoon, I put a working order in for USO Jul14 37.50 PUTs for .52 and will look to take profits at the 50% ,100% and 150% profit levels. I will exit on the downside at the 50% level.
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