Oil Readying for More Downside? (Paulenoff)

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As of this moment, my optimal scenario for the nearby NYMEX oil price calls for a period of stability and/or a recovery rally that grinds into the 80.50-82.00 resistance area prior to another downside pivot that presses the price structure to new lows beneath 75.71 on the way to 70.00-65.00 thereafter.

At the risk of missing such a downleg in the absence of the anticipated recovery bounce, I will watch from the sidelines for a while longer prior to deciding if I should commit funds to a short position — in the ProShares UltraShort DJ-UBS Crude Oil (SCO) — into NYMEX price weakness (though always a hazardous strategy to short oil into weakness).

That said, only a rally that sustains above 82.00 will neutralize the imminent threat of another plunge in oil prices and the U.S. Oil Fund ETF (USO).

Originally published on MPTrader.com.