Introduction
Crude Oil Futures (CL) dropped dramatically for five straight sessions last week. CL dropped a total of 10.5% from the high of Wednesday 5th in those five days. There was a support level at around $76 that was taken out which is likely what lead to the sharp decline but the story changed quickly.
The Bulls stepped back in and bid CL back for 6 out of 7 sessions, erasing most of the losses. Let’s see what the technicals tell us and if there are any trade opportunities around the corner.
Technical Analysis
Long Trades:
Breakout Trade:
- Entry: If the price breaks above the 100-day moving average (79.44) and closes above it.
- Stop Loss: Place a stop loss just below the candle that breaks and closes above the 100 sma.
- Take Profit: Target a quick scalp on the following day.
Support Bounce:
- Entry: If the price pulls back and finds support around 77.00 (recent low area), enter on a bounce.
- Stop Loss: Place a stop loss below the recent low at around 76.50.
- Take Profit: First target the 100-day moving average at 79.44, then the 50-day moving average at 80.11.
CL has been stuck in a sideways range which means medium to long term trades right now are difficult to find. Recent news of the Saudis refusing to sell oil in Dollars could also send volatility rippling through the markets. Take short term trades and don’t be scared to take profit in this market environment.
