Is this still the ‘Top Trade’ of 2025? (WTI crude oil)It’s not a big secret actually- I’m talking about crude oil!
In the final week of 2024, the team and I highlighted two versions of the WTI crude oil weekly chart and asked ‘is this the top trade of 2024?’
Version 1 has already happened, WTI crude hit $55 per barrel, the downside objective of the smaller triangle pattern on the chart.
Version 2 showed a much larger triangle pattern (which we show again this week) and had a downside target of nearly $30! It would take a lot of conviction to ride the price that far down, but could crude oil still move a lot lower this year?
What’s interesting is that this is still one of the ‘less talked about’ situations in the market today because of the huge volatility seen in both stocks, forex and fixed income.
And I like that nobody’st talking about it - because you don’t want everyone in on it - that means the move could already be over.
Crude oil hit a five-year low. That’s meaningful.
Strong markets don’t hit 5-year lows, weak markets do. And we like to sell weak markets.
Of course, ‘oversold markets’ hit 5-year lows too - and that largely explains the ‘bottom feeders’ who bought WTI crude oil at $55.
Downside volatility got extreme owing to Trump’s tariffs and mean-reversion helped it rebound on news of the 90-day pause, much like stock markets.
I am completely open to the idea that $55 is a multi-year low and essentially marked the bottom. The huge Hammer reversal candlestick pattern adds weight to that idea.
But with the price having hit $65 last week, buying the lows is yesterday’s trade. What do we do today?
We will be looking to do what we said in Week 53 of 2024 in case crude oil turns out to be the ‘top trade of 2025’ as we imagined.
By the way, Brent crude oil has a very similar setup so this is not a ‘US oil’ thing.
There are two parts to trading ‘planning the trade, and trading the plan’.
There isn’t much use in making a plan, and not taking the trade.
There are always reasons not to take a trade- but if it’s a ‘good trade’ that fits the rules of your trading strategy, then those reasons are usually just ‘noise’.
WTI Crude (USO/USD)
Long term chart (weekly)
Trend: Down
Phase: Re-test of breakdown
Resistance = $70
Support = $55
Price action: Price has broken down, rebounded and is now testing the breakdown level, while under the 30-week moving average. Should the price break back over the broken long term rising trendline then we know the idea, or at least the timing on the idea is not right.
View: Bearish while under broken up-sloping long term support
