Crude Oil futures sold off hard today, it’s currently down $2.80, or 3.84%. That’s a move of $2800 per futures contract! Traders who can recognize breakout setups would have been alerted to the potential of a big move today. Let’s look at it more closely.
I knew to be on the alert for a big move today because of a Narrow Range day setup. Comparing the four most recent trading sessions; I look for a breakout move for the following session IF the previous session had the narrowest trading range of the previous four sessions (I have a couple of other setups I monitor for breakout alerts as well.).
When a market has a breakout setup, I look for the market to make a directional move. I look to enter the market early in the move, and ride the breakout move.
Below is a daily chart for November Crude Oil. Friday was the narrowest trading range of the previous four; it was 1.41; Thursday’s was 1.45.
Breakout in crude
This meant I was looking for a breakout move. The first breakout point was Friday’s low. I use my Trade or Fade Advisory to find breakout points. Today’s Trade or Fade report for crude oil is below; Trade or Fade’s downside breakout point was 71.23.
Tioday’s Trade or Fade report
Once shorts were entered, profit targets could have been the Fibonacci retracement levels at 70.62 and 69.92. The Trade or Fade objective was S-2 at 70.25. It also hit the bottom line of the recent triangle; this price was 69.36 today.
I’ve written a book to teach you how to recognize and trade breakout setups; you can get more information and get a copy here.
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