Give Me WTI Over Brent Crude All Day
- Posted by JC Parets
- on February 21st, 2014
For several years now, the price of Brent Crude Oil has been nicely outperforming prices of the West Texas Intermediate light sweet crude oil. But I think we’re finally starting to see that shift in momentum back towards WTI.
This next chart takes a closer look at that whipsaw in the USO/BNO spread. Not only do you have an island reversal of sorts down there, but also a nice bullish divergence in momentum:
I think this spread can easily get back to 93, but this false breakdown can absolutely be the catalyst to take this spread substantially higher and well above parity.
From a risk management standpoint, more tactical participants want to see this spread hold above 82. A breakdown below that would signal to me that more consolidation may be necessary. Under those circumstances, this chart becomes messier. We definitely want to see those levels hold.
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J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) and is a member of the Market Technicians Association. More
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