Oil breaking higher through important trendlines

There is more and more evidence that energies might rally in the end of this year and so many people could be caught on the wrong side of the trade. Not only retail community but also professionals are saying oil has to go down. We can see something similar in COT positioning as well. This reminds me of gold bugs, but in energy we have energy bears and their narratives. It’s fascinating!

I wrote a post about oil a month ago. I advise you to read it (see here) before you continue with this post to gain a perspective. Therefore I won’t go into everything again but rather expose the technical picture.

Brent was much stronger than WTI in the last couple of weeks so let me start with Brent. Does this look to you like it wants to go down?It’s breaking descending trend line which could be argued to be even a bottoming head & shoulders pattern. Not only that but a shorter term looks also looks very constructive with breaking above a previous high at just below $55!

What about WTI you ask? Well, let me show you first the rolling front month contract.
It’s breaking through the falling trend line so many bears were clinging on. Very similarly looks the front month (Oct17) contract. 

And it seems now even XLE Energy ETF looks like it’s buying it!

$XLE trying to bottom here! pic.twitter.com/YPwb0juH68

— Domen Butala (@DomenButala) September 13, 2017

WTI clearly is not out of the woods yet while Brent looks much more constructive. Based on Brent’s price action, which so far was leading, and based on the arguments from the post mentioned above (some are even stronger now, e.g. COT positioning), I am expecting the price to resolve higher. Maybe much higher.

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