What Goes Up Must Come Down
Undeniably, those astute investors who caught the rise in crude oil prices have done well over the last few weeks. Even so, the signs now are that crude is peaking and is about to roll over. How do we know this? All kinds of signals abound. Among them are the clues given off by Japanese Candlestick price formations, which forecasted the rise and which now predict the decline. The candles are uncanny in foretelling major changes in trend. Among the most reliable formations is the "shooting star" pattern, which indeed looks just like a shooting star, and occurs at the top end of a long advance in prices. If the shooting star is followed by a "down day," the chances are excellent that a substantial decline in prices is about to follow. Just as an exercise, I calculated the potential profit which an investor would have earned had he bought in at the beginning of the latest rise and exited the trade yesterday. I used heating oil as the analogue for jet fuel prices in the analysis. I found that the answer was that the profit would have been sufficient to half-fill the tanks of a Boeing 777 with the profit converted to jet fuel, even at yesterday’s elevated prices!