When I first flagged a $29 target earlier in the year with crude trading near $50, it may have sounded farfetched. I stuck to my guns even when the futures rallied above $60, arguing that the supply/demand picture had grow even worse with China’s economy slowing down. I cautioned against buying into the rallies, which were driven entirely by short-covering. Staying short required steel nerves and plenty of patience, since ‘everyone’ was betting on energy prices to fall. When the herd is on the same side of a bet, watch out! It doesn’t necessarily mean they will all be wrong; however, they had better be prepared for a very bumpy ride, since Mr. Market is not known for making it easy for most traders to make money easily just because they happen to be right.
The chart shown is from a slightly different perspective than the bearish ones reproduced here earlier. It suggests that prices could eventually fall below $29, based on an extension of the pattern shown. In the meantime, the best-case scenario would call for a reversal from no higher than 33.30, the ‘secondary’ pivot here. The pivot is well located for tightly stopped bottom-fishing, and that’s what I am recommending. A 30-cent stop-loss will be needed, at least, but the preferred entry method would be via ‘camouflage’ on a chart of much lesser degree, such as the 5-minute.