Tuesday, July 7, 2015

Beware Looking for Patterns Where There Are None -- $Brent

The oil market is in chaos. I wouldn't try to read too much into a chart right now. That said, here's a rare "pouncing dragon" chart forming in $BRENT.

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(Updated chart)

You can see the dragon coiling up, ready to pounce, its tongue lolling out and indicating the next leg down.

And now I must admit I am only fooling. There is no such thing as a “pouncing dragon” pattern, in oil or anything else. This is just a reminder to not read too much into an extremely tricky market. 

In truth, there is a lot going on in the crude markets.
  • OPEC production is rising
  • Iran’s potential surge, with its "superweapon" of 30 to 40 million barrels of oil floating in storage in tankers, read to go to market
  • U.S. production plateauing and maybe rising higher
  • Russia’s eagerness for exports, helped by a weak ruble.
It all sounds bearish. But don't be surprised if we get a rip to the upside. The best thing to do in oil is either A) sit tight in positions that pay you to own them or B) play CONTRARY to short-term moves. Like short the next rally, maybe.

Or do what you want. I'm not the boss of you. Good luck and good trades.


  1. Yes, I kept reading to the 3rd paragraph just to see if this was a real pattern name.

    I blame "three peaks and a domed house".

  2. looks like a duck with a worm ....