Traders sell short the minor bounces. The oil price has formed a medium-term head and shoulders (as labelled). It recently broke down below line 3 (the “neckline”) to confirm that bearish pattern. Lines 1 and 2 form a large broadening formation (or “megaphone”). The only potential bullish sign over the short term is that the stochastic oscillator (on top) is oversold. But currently give the head and shoulders priority. Traders sell short the minor (eg, two-to three-day) bounces. Don’t take large positions because of the oversold stochastic. Note: The longer term picture is still bullish. The short-term target is down to US$98/barrel (spot price), based on the height of the head and shoulders projected down. That’s also the approximate target given by pattern 1-2. (At the time of writing Brent was at $106,38/barrel.) The initial stop-loss for shorts is a close above $111,10. Note: When the price gets to its 200-day moving average (at $102) lock in partial profits and lower your stop.