Story Highlights
- Fear around the spread of the coronavirus is pushing oil prices lower.
- But there are signs that oil will rebound.
- John Ross shares how to grab double-digit gains on oil’s rally by March.
On January 8, I predicted the price of crude oil would fall as much as 10%.
But I was wrong. Oil fell 16%!
I knew that oil bulls were getting ahead of themselves after Iran retaliated against the U.S. for killing General Qassem Soleimani. And that would cause a pullback in prices.
But I couldn’t have predicted the coronavirus outbreak. Oil prices are being steered by fear again.
The chart below tells us the oil price has fallen too far, too fast. And we can make money when it rebounds.
I’m looking for oil to bounce 7% during the next few weeks. And today, I want to show you an easy way to double the performance of crude oil’s rally.
The U.S. oil price benchmark is trading around $53 per barrel at last glance. Two things on that chart tell me it’s ready to rebound:
- Price is testing chart support.
Oil has fallen to a group of previous lows — around $53 per barrel — where buyers stepped in and kept the price from falling further. This level offers support again.
- Bears will lose confidence.
Confidence cycles exist across short- and long-term time frames. They end when bulls or bears lose confidence in the prevailing trend.
Our Apex Movement Patterns (AMPs) measure price action. And since emotion determines prices, AMPs help us spot confidence cycles.
And the AMP on oil’s sharp decline tells us the bears are losing confidence.
Price Turns When Bulls and Bears Lose Control
The outbreak of the coronavirus in China added to oil’s price decline this week and last. At least 80 Chinese are reported dead and 3,000 infected. China has quarantined many cities.
Traders worry the outbreak will reduce energy demand as people put off travel plans.
Bears took control of oil, causing the 16% decline we’ve seen.
But my AMP on oil is signaling a rebound.
An Easy Way to Make Quick Gains on Oil
We are being handed a short-term buying opportunity.
We can trade oil and make gains when the price goes up in the next three to four weeks.
Traders can buy into this idea with the United States Oil Fund (NYSE: USO). It’s an exchange-traded fund (ETF) that tracks the price of oil.
If oil climbs 7%, USO will too.
Or, traders looking to ramp up their short-term gains can use a leveraged ETF such as the ProShares Ultra Bloomberg Crude Oil (NYSE: UCO). If the price of oil climbs 7%, UCO will rise at least twice that!
You can buy ETFs in your brokerage account the same way you do with stocks.
Stay tuned for weekly updates. It’s too early to say for certain, but this pattern could lead to a long-term breakout.
Good investing,
Editor, Apex Profit Alert
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