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We predicted the oil crash in 2020 - are you ready for the 39% oil rally in 2021?

by , 26 January 2021
We predicted the oil crash in 2020 - are you ready for the 39% oil rally in 2021?
If you reading Trading Tips in 2020, you'll know I was a big seller of Brent Crude throughout the year.

In the last oil article, I made a wild prediction that Brent Crude oil was heading to $30.

If you missed it, you can catch up here…

 
 
And in just a few weeks, the price crashed down not only to $30, but all the way to $20. 
 
And now it's 2021, which means new outlooks for new markets.  
 
And boy, my view on Brent Crude has made a complete 180° turn.  
 
In this article, I'm going to show you why I expect oil to rally over 39% and how we can profit from the rise. 
 
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How the vaccine trials are showing great buying potential for Brent Crude
 
Joy and positivity are flooding the markets lately when it comes to commodities, resources and metals. 
 
We've seen gold begin its rally, after 8 months of a sideways movement.  
 
Platinum has made its 10-month high price.
 
Resources across the board have been on their 2% to 3% weekly run ups.  
 
And the star of the show has been Brent Crude and energy stocks.
 
Since the price touched the low of $20 a barrel, it's been on one up trajectory to $50 once again.  
 
This is all thanks to the fast response to the distribution of the COVID-19 vaccines. 
 
In fact, if we look at the U.S you'll know the Pfizer-BioNTech mRNA-based vaccine BNT162b2 has now reached long-term care facilities.
 
Even Walgreens is looking to grow the program to nearly 3 million residents and staff at 35,000 long-term care facilities. 
 
Here's what Dr Moncef Slaoui, head of Operation Warp Speed projected:
 
The vaccine trajectory so far suggests that the majority of the American public are likely to have received the vaccine by the end of February, better than the one-third of the population target.
 
With the trials out in many parts of the world and the actual vaccine being distributed, including South Africa, we've seen an influx of buying from investors driving the prices up.  
 
In fact, speculators, including hedge funds and other money managers, have increased their buying (net long) U.S. crude futures and options positions by more than 25% over the last six weeks.
 
Saudi Arabia is finally cutting supply which will drive up the oil price
 
Last week we saw Brent Crude futures rally further based on the news that came out in Saudi Arabia. 
 
It was announced they plan to cut one million barrels of Brent Crude oil a day in February and March. 
 
Here's what RBC Capital Markets analyst Michael Tran said in a note last week. 
 
"OPEC and its allies agreed this month to reduce supply cuts, which will add more oil to the global market."
 
The Petroleum Institute also said domestic crude stockpiles fell by 5.82 million barrels last week.
 
And according to the median estimate of a Bloomberg survey, they expect inventories to drop by 3 million barrels. 
 
This supply cut will lead to more demand and buying, which will send the oil price up further.  
 
This massive Cup and Handle pattern is showing a 39% rally on the cards
 
 
On the weekly chart, Brent Crude Oil has formed a strong Cup and Handle formation (shaded area).
  
This is a chart pattern which resembles a cup with a handle.
 
Just like every cup and handle has a brim (high price), so does the above chart pattern. You can see a brim level (breakout level) at $46.20 (black line).
 
The price recently broke above this level, which tells us there is more buying (demand) than there are sellers (supply).
 
However, I waited a few more weeks to confirm the upside.
 
And now I have my confirmation, based on what I’ve mentioned today, I'll use the High-Low calculation to work out my next price target. 
 
Price target = (High - Low) + High
($46.20 - $20) + $46.20
= $72.40
 
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Here's how I'll profit from the 39% Brent Crude rally
 
First, I'll buy the Brent Crude Oil CFDs and hold it until it hits my target price.
 
Second, I'll be looking to buy stocks that rallies, with Red Hot Storm Trader, when the oil price runs up. This includes resource stocks like BHP Billiton, Sasol and Kumba Iron Ore.
 
Third, Trader X from Pickpocket Trader is scouring for international trades as we speak and is going to take full profit advantage with the oil price rally. I’m talking about companies like BP oil, Brent Crude futures, Exxon and Royal Dutch Shell.
  
Trade well, 
 
Timon Rossolimos,
Analyst, Red Hot Storm Trader  


We predicted the oil crash in 2020 - are you ready for the 39% oil rally in 2021?
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