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.
Essential Guide for Futures Swing Trading
In this guide, experienced trader and broker Scott Hoffman explains the trading methods he uses to analyze and trade the futures markets and to publish his trade advisory, Swing Trader’s Insight.
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.