Weakness or a powerfull coilRIG has lagged major oil players such as xom. Xom was able to breakout of the consolidation in the 55 range to be past 60 dollars again. RIG on the other hand has failed to breakout past the 3.71 resistance level.
This is on the back of a major move in oil prices up. When oil was at 64 a few weeks ago RIG reached 4.5, but now that oil is at 65 its trading at 3.5. This might be a major sign of weakness, especially on the back of earnings, which generally came in as expected. However, This if it does break past 3.5, i see a massive catch up move past 4.5 into the 5-6 range.
Economic: The API released inventory levels, and it came in extremely bullish. The draw was -7 compared to -2 expected. Oil did move down lower, although I expect OIL to move past the $70 range. This will be a major multi year resistance level. In the past Donald J. Trump will start tweeting any time oil hit these levels. I expect RIG to move dramatically up, as we approach those multi year resistance levels in crude oil.
Trade set Up:
For this trade i recommend buying in at 3.8, with a stop loss at 3.2, and a price target of 5. At 5 I would add to the position and move the stop loss up to 4.5.
From this point I would not add to the position until the 7.2 resistance level is broken up.
For trailing stops i recommend the low of the trailing 5 day bar.
