Crude oil has gained $8/barrel in the last month, putting it just a few dollars shy of $100. My stance: the easy money has already been made in bullish trade.
Prices moved quickly from oversold to overbought territory as Stochastics shows in the chart below. I think we?re in the process of establishing an interim top, with a $3 to $5 correction soon to follow.
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As far as winning streaks go, crude has closed higher 14 of the last 20 trading days (after a swing low on March 4th). What?s more, we haven?t seen two consecutive ?red? sessions since that low was established a month ago. This streak will be broken if today?s close is below $97.? In my eyes, we?ll have confirmation of an interim top on a settlement under the 8-day MA (orange line). I do not see a fresh 2013 low on the horizon, but I do think the market can depreciate $3 to$5, giving us plenty of room for a bearish trade.
If you?re bearish WTI, my suggested play is shorting June or July futures while simultaneously selling out-of-the-money puts 1:1. Use Fibonacci levels as your objectives – a 50% retracement would drag May futures $3.50 below current trade? June and July contracts should move accordingly.