In last night’s edition of Swing Trader’s Insight I noted that crude oil futures had a breakout setup for today. This meant we would look for a strong directional move today as traders moved the market out of yesterday’s compression and lack of direction.
On the upside, our first breakout level for November crude oil would be the Monday high of 49.79. If a rally got started I would also watch the $50.00 level, as round numbers often become pivot points for market moves (This might seem too obvious and simple, but I find that it often works.).
When I was writing the morning comment for STI, crude was above both the Monday high and $50.00 and my comment was: TTT Sell day with a breakout setup – 50.00 is a pivot point for the rally, 50.55 is next. The reason I chose 50.55 for the second reference price was the same reason I suggested using 50.00. I really thought 50.50 would be resistance: I would want the market to get a few ticks above that level before I would actually buy or add to long positions there.
Around 8:15 AM we got the move above 50.50, which gave us another opportunity to get long if we had missed the earlier entries. If you were watching the market, you might have seen earlier entries above 50.00; I was writing and didn’t want to try to trade with one eye and write with the other.
Crude oil futures rallied over the morning on comments from OPEC’s Secretary-General, who suggested OPEC might take “extraordinary measures” to rebalance (support) crude oil prices. The $51.00 level would be next resistance (sense a pattern here?) especially given the Fibonacci retracement resistance at 50.98, which was a 50% retracement of the selloff from the mid-September high to the swing low last Friday.
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Essential Guide for Futures Swing Trading
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