Oil has staged a near perfect reversal of the multi month trend that was in existence since its peak in late July 2008. The above chart resembles very closely to the USD/INR fall from 47 to 39 and its bottom there.
Further confirmation –
• for the first time since Aug 2008, price has managed to close above the key 55 day EMA for 4 consecutive sessions.
• there is also a double bottom formation which puts the immediate minimum target at $65
Since price has reversed a multi month trendline, the momentum and velocity of the impending rally in oil is likely to be very high.
From a risk management perspective, it would be ideal for oil companies to hedge out their exposure for the next 6 months.
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