Oil – $101/103 looks an interesting level for West Texas Intermediate

Hello again,

You can trade oil as a CFD. The minimum position size is only 100 barrels ( $1 per 1c market move) and there are no deliveries involved

The oil price is also having a major impact on most other markets at the moment so I thought readers may be interested in a post reviewing current charts

I’ve started with a big picture view in the weekly chart. The whole rally since the December 08 low is so far in a large 3 swing or ABC structure.

There is a significant Fibonacci cluster between about 101.30 and 103.30. This consists of a 61.8% retracement of the O/X crash in oil prices and a projection that the B/C swing could be 161.8% of the distance from A to B.

Fibonacci projections often get a bad rap because people look upon them as reisitance levels and make predictions that the market will reach or respect that price. This doesn’t really make sense. There are often a number of these levels. They won’t all be right.

 What Fib cluster levels are best used for is to say that if price happens to get to and then reject them then there is a tradeable probability of that particular peak being a significant turning point

The $101 area also features in the daily chart below

DAILY - PERPETUAL

 

After peaking in early January, the market went into a volatile but broadly sideways movement that formed a right angled broadening formation. This is described by the black dashed lines.

We smashed through the top of that formation yesterday. Break out traders may have bought when that happened

The chart outlines a strategy for this break out trade. The profit target uses the measuring rule. This adds the height of the pattern to the horizontal resistance at the top of the pattern. This level is 101.80 which coincides with the Fib cluster area discussed above

The “stop trigger” noted on the chart is half way to the profit objective. If price reaches that level ,a one candle trading stop is instituted. The stop is then left at the 50% level as soon as you get a candle with a low above that price

Cheers

Ric

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
This entry was posted in Commodity, Market, Trading. Bookmark the permalink.

3 Responses to Oil – $101/103 looks an interesting level for West Texas Intermediate

  1. Joel says:

    Ric,
    Is there a CFD for oil available here in Germany through one of our exchanges?

  2. nictrades says:

    What a great trade this was today. Hope someone took it
    Thanks Ric

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