Playing the Oil Fund's Breakout
Now that the capital flow out of bonds and into risk assets is gaining momentum, it's only natural that breakouts are occurring in a variety of asset classes. Recently, we've used technical patterns to capitalize on this fundamental shift as traders eschew safety and embrace risk. One pattern that has frequently appeared on the charts in recent weeks is the bullish cup and handle.
We used this pattern to capture the recent breakout on Apple (AAPL), and now a similar setup has occurred in the U.S. Oil Fund (USO), which is designed to mirror the movement of West Texas Intermediate crude. The USO chart is interesting, as the pattern has formed an "echo" handle, which is indicative of the fractal nature of the pattern. The theory behind the pattern is that each rounded bottom represents a price rebound after uncommitted traders exit their positions....305 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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