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Home / Futures Blog / Trade or Fade and Today’s Breakout Move in Crude Oil Futures

Trade or Fade and Today’s Breakout Move in Crude Oil Futures

August 18, 2014 by Scott Hoffman

 

Trade or Fade is an offshoot of my Swing Trader’s Insight advisory. Breakout setups are one of my favorite patterns to trade- they identify markets that are potentially set up for a strong move in one direction. I have a set of patterns I use to anticipate breakout setups for Swing Trader’s Insight however I was looking to broaden the patterns used to identify breakout setups and give additional price levels to use to trade breakouts.

CLV Daily August 18

Trade or Fade identified today as a Trade (breakout setup) today for the October crude oil futures. There were two patterns that told us to anticipate a breakout move for today. First, Friday was an inside day; one of the patterns used in STI. Second, Friday’s trading range was 52% of the range on Thursday. Any time a trading session shows significant contraction from one session to the next (I use a 70% threshold) we anticipate a breakout move for the following session.CLV ToF August 18

 

In a Trade or Fade report there are seven price levels. The pivot is the open of the current session; breakout levels are centered on that level. There are also three support and three resistance levels; these give the entry price for breakout trades (first support and first resistance) and then profit targets for breakout moves (the second and third support and resistance levels).

Today’s levels for a breakout move were either the R-1 level of 95.96 or the S-1 level of 94.33; we would use a move beyond either of these levels as a trigger to enter a trade in that direction. The standard stop loss for a ToF trade is the pivot (session open) although I often prefer to use a tighter stop- breakout moves should show strong momentum and shallow retracements against the main move.

CLV intraday August 18

We entered our short sale around 8:10 AM as it dropped below the S-1 level. A stop loss above the previous intraday swing high of 94.62 gave the trade a reasonable level of risk while also serving to confirm the downtrend was intact.

Crude sold off over the morning, hitting the S-2 profit target (93.51) around 10:15 AM.  As this level held (it is support) it was a good time to take profits.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

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.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: Trade or Fade

About Scott Hoffman

Scott graduated from the University of Chicago in 1986 with a degree in Economics. After graduation, Scott worked on the floor of the Chicago Mercantile Exchange then moved upstairs, serving as the personal broker to a former chairman of the Chicago Board of Trade. There, he worked as a broker and margin manager, starting up the firm’s full service brokerage division.

Today, Scott serves as an educator and mentor for new traders, and as a trading partner and ally for experienced traders. The breadth and depth of Scott’s knowledge make him the “go to guy” for both retail and institutional traders.

Scott also publishes two futures advisories, Swing Trader’s Insight and Trade or Fade. He also writes the futures trading blog at www.futuresinsightblog.com. Scott has written articles for a number of futures publications and has done numerous futures trading seminars, including seminars for both the CBOT and CME.

Scott offers his customers the knowledge he has gained from his more than 25 years of experience in the futures business. Scott is accepting new clients at this time.

Scott lives in suburban Chicago with his wife and three children. In his free time he enjoys coaching his children’s sports and various other athletic activities.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

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.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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