A Potential Reversal Lurks Over Oil’s Current Rally

[Trading With Larry Benedict]( A Potential Reversal Lurks Over Oil’s Current Rally By Larry Benedict, editor, Trading With Larry Benedict When the oil price burst out of the blocks at the start of 2022, it wasn’t just the mainstream energy stocks that enjoyed the bull run… Other related sectors, like oil services, also came along for the ride. From early January to mid-April, the VanEck Oil Services ETF (OIH) rallied a whopping 70%. Then, after a pullback into May, OIH rallied again before topping out in early June. However, momentum reversed course as the oil price fell sharply. OIH lost nearly 40% before bottoming out in early July. When we looked at OIH [on August 25]( (red arrow on the chart below), it was recovering and in the early stages of a promising rally. That rally petered out, and OIH fell back to support. Yet OIH has recently begun to climb once again. So today, let’s see if this rally looks set to build further… or will crumble like the last… Recommended Link [Retirement outlook not so good?]( [image]( “Ever wondered why the rich seem to get richer? I can tell you why… Because they don’t follow the same old tired advice that everybody else does. But today I’m going to share a special technique with you… For two decades, I ran a $200 million money management firm. I guided the private investments of 100 of the wealthiest people in California. And my Rolodex read like “the who’s who” of Silicon Valley… Most of my former clients were CEOs, entrepreneurs, and Venture Capitalists. Some of these accounts were worth up to $40 million alone… I was really good at making my clients richer. And It was all thanks to a technique I perfected called the “Money Multiplier.” It’s a way to take a small amount of money and double, triple, even quintuple your initial stake in a matter of weeks… It’s the same technique I used as a former money manager to make money for my wealthy clients. And today I’m going to share it with you… And to make things even easier… I’m also going to show you how it can be applied to just three stocks.” – Jeff Clark [Click here to see my urgent bulletin.]( -- A False Move On the chart, the 50-day moving average (MA – blue line) shows OIH’s long-term trend… We can see OIH began its rally from January 2022… then it rolled over and fell through August… VanEck Oil Services ETF (OIH) [Image] Source: e-Signal The reversal and sharp fall from OIH’s June high at ‘A’ coincided with the Relative Strength Index (RSI) forming an inverse ‘V’ right below overbought territory (upper grey dashed line). As you can see by the red circles, this is a common RSI pattern that has preceded previous falls. That down move from ‘A’ then accelerated with the RSI breaking straight down through support (green line). However, as the RSI bounced along oversold territory (lower grey dashed line), selling momentum in OIH eventually waned. This enabled OIH to establish support along the orange line. [New Battery up to 94% Cheaper Than a Tesla Battery]( When we looked at OIH in late August, two technical signals underpinned OIH’s emerging uptrend after holding that support level… - The RSI had broken up through resistance and was starting to gain traction in the upper half of its range. - The 10-day MA (red line) had recently broken back above the 50-day MA. As the chart shows, however, that proved to be a false move… Take another look… VanEck Oil Services ETF (OIH) [Image] Source: e-Signal The RSI fell through support, and the 10-day MA crossed back below the 50-day MA. Likewise, OIH retraced lower, where it retested and held support again. You can see that OIH’s hold on support coincided with the RSI forming a ‘V’ from oversold territory… Since then, however, OIH has rallied strongly with the RSI breaking back into the upper half of its range. And the 10-day MA has bullishly crossed back above the 50-day MA and is accelerating higher. So what can we expect from here? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Big Swings in Direction The longer the 10-day MA continues to accelerate above the 50-day MA, the bigger this move will become. But much like the oil price, OIH can turn on a dime. The big swings in the 10-day MA against the 50-day MA show how quickly OIH can change direction. And that’s why I’m closely watching the RSI right now… As you can see, the RSI has just gone into overbought territory. What happens around this level will be key. If the RSI keeps tracking along or near this level, OIH could continue rallying – much like it did at the start of the year. However, a strong reversal could see OIH’s current rally come to a quick end… And much like it did when the RSI reversed previously (red circles), that could provide the setup for a potential short trade. Regards, Larry Benedict Editor, Trading With Larry Benedict Reader Mailbag In today’s mailbag, subscribers to [One Ticker Trader]( thank Larry for another win… I entered the trade at $3.20 with three contracts and got out at $6.19. I booked a $893/93% profit in eight days. This was my first One Ticker Trade, and it was the best trade I've made this year. Thanks… Keep them coming. – Richard R. Thanks Larry, for the trade. I entered the trade at $4.85 and exited at $6.21 for a very nice 27.73% gain. This was really great for 18 days! – Russ R. Thank you, as always, for your thoughtful comments. We look forward to reading them every day at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… [Bezos & Musk investing billions to transform America]( This is troubling. Have you heard of COP26? Almost nobody has. Amid the distractions caused by lingering health issues, conflicts overseas, shortages, and inflation… Treasury Secretary Janet Yellen recently took the stage at COP26 in Glasgow, Scotland to address some of the world’s most powerful people. From the stage, Yellen called for world leaders to commit to a $150 trillion ‘global transition’ of our economy. Since then, Bank of America has signed the accord, along with 131 countries, 234 cities, and 695 of the world’s biggest companies. Jeff Bezos and Elon Musk have invested in this ‘transformation’ as well. What is it that Yellen, Biden, Trudeau, Bezos and Musk are pushing for? And what does it mean for your money? Investigative journalist and renowned economist, Nomi Prins has followed the money… And what she’s found is startling. [Go here to see how this ‘transformation’ will play out – and what it means for your money.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [The Ultimate Guide to Taking Back Your Privacy]( [The Trader’s Guide to Technical Analysis]( [The 101 Guide to Pre-IPO Investing]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. The Opportunistic Trader welcomes your feedback and questions. 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