Crude on the move

The price of crude has been on the rise recently after falling off a cliff from its early May highs of $105 and most recent high of $110 in Feb/Mar. But having successfully tested the low area from late 2011 near $78 it has been on the rise and could be in the midst of an inverse head and shoulders.

More interestingly is that the price is now over its 50day moving average of $87.20. The last time this happened, as highlighted by the green circles on the chart below, was late 2011. In the weeks/months following that development the price of crude continued to rise substantially. It may or may not be that crude is setting up for such a large rally, but it should be good for a near term bounce back up towards its 100/200day moving average area near $95. Watch energy stocks (components of the XLE specifically) in the near term to benefit most from this possible development while airlines could be on the other side of that bias.


(Adding this after the initial post - see that volatility has declined in crude options with this story from Bloomberg. With lower vol, this could be one getting-more-inexpensive way to play a 5-10% move from here).