In early May, oil had a selling event which only lasted a day. You cannot push a commodity into overbought or over sold territory in a day. It usually takes 5 to 7 days. You have heard me say it before, but the rally out of this intermediate cycle low will have the potential to be very large....one that could take oil quickly back to $52-54 which would only be at the 200 day moving average. The last rally out of an ICL back in November took oil up $13 on its first daily cycle. If this cycle bottoms at the 39 or 40 level, a move back to the 200 day moving average would be on par with that.
As with any trade of this nature I recommend, there will be stops in place to manage the risk. One thing I am learning is to make the stops wider to allow for volatility so we are not swept out of our positions. Still yet, the risk will be relatively low and the reward very high. I will be diagramming the trade over the weekend, so expect a follow up post to this one then or early next week.
If you need a brokerage account, you should open one this week. This link will take you to where you need to go to open one with RJ Obrien if you wish to open one with me. You won't need to fund the account until you make the trade.