On Monday I shared that Crude Oil was pushing support to an extreme (see post here)
What happens when support breaks? Often a sizable decline!
Monday Crude was trading at $99, today it is trading below $93. Down a quick 6% this week….the equal of the Dow falling 700 points!
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Now a bigger test is taking place as Crude Oil is testing the top of a channel that has been in place for almost 30 years!
A solid break of this line would increases the odds of Crude Oil heading down to the mid-range of the channel, around the $60 level.
A break of this line and I suspect DNO or products like it will do rather well!
SP…Thanks for your comment.
The Power of the Pattern suggested some time back that Oil was in trouble…see post below, which was put on the blog on 6/13, suggesting oil was in trouble.
Then a follow up, which the chart suggests Oil could go to $60…which was all reflected in the patterns before the news.
Not only does this look good for DUG, DNO should do well too!
Almost every single analyst on CNBC except options trader Jon Najarian has indicated that the SPR release today is a BAD idea…looks like the crowded “longside” trade in Oil is getting squeezed. Chris, you made a great call on DUG and I wonder if the margin calls on crude will be quick and violent trend down in oil.
Johny…Email me please to discuss. Thx Chris
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Aaron…DNO is a short oil ETF.
If Crude would reach $60, that would be a drop of about 35%. Premium members own DUG at this time. DNO is a different type of play, per is related to oil only. DUG is an oil and stock play. DUG has created what looks like an inverse head and shoulders with the neckline being tested right now.. a breakout of the neckline and I suspect DUG will do rather well.
DNO is a long oil play. Aren’t you suggesting that oil could drop 50% or more.
Wouldn’t DUG be a better play?