Oil prices are trading inside a rising wedge pattern. In the chart below we also observe the bearish warning signs by the RSI divergence in the 4 hour chart. Support is at $70. A break below it will confirm the wedge is broken and we should at least pull back a couple of $$.
However I can see another new higher high from a bounce at $70.50-$71 and then the break of the wedge for a pull back towards $68-69 minimum. Resistance is at $73-$73.50 so a move towards the upper wedge boundary could be a nice short-term bearish opportunity.
What trades can be initiated?
- Short near $73-73.50. Tight stop, playing the rejection from the upper boundary.
- Short on a break of $70. Playing the wedge break down.
- Long near $70.30 with $70-69.70 stop targeting 73. Strategy wants price to continue to respect wedge boundaries for new highs.
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