If you’ve been reading this blog for a while, you know that one of my favorite trading situations is the crude oil market after the release of the weekly crude oil inventory report from the EIA. There are often good breakout trading opportunities after its release; today was a good example of how to trade them.
The daily chart for March Crude Oil futures is below. Monday had a breakout setup – an inside day and the narrowest trading range of the previous seven sessions. However, there was no breakout move yesterday, with today’s inventory report combined with the FOMC meeting.
click to enlarge
The 10 minute chart below shows today’s action. The first break after the inventory report stopped at 73.90, then started to rally. As it did, I posted on Twitter “The $74 area held for $CL_F; can it rally now? Watch yesterday’s high at 75.15”. This rally reached 74.96; it couldn’t reach the overnight high at 75.09, much less yesterday’s high.
The ensuing selloff was today’s breakout trade to take, as the bears finally won the tug of war. We knew this because it took out the previous swing low at 73.90, then yesterday’s low at 73.82. These two price levels were our trigger for short entries.
From those entries it took a quick dive, falling to a low of 72.65 in about 20 minutes, for a move of about $1200. If you held on after the low was made, the first recovery high at 73.45 (the blue dotted line) was resistance and a stop loss point for about an hour, until it was taken out.
click to enlarge
Swing trading often means having patience to wait for the right setup, rather than taking lots of trades. As a broker, I like active traders, but this kind of patience helps my clients become better traders.
This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
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