Tag: Oil Trading Strategy

How to Swing Trade Crude Oil: The Next Leg Has Started, Will it Last? Our Oil Trading Strategy (Part 1 of 3)

Curt MelonopolyCrude Oil Trading Strategy, Swing Trading Crude Oil, , ,

Swing Trading Crude Oil – Next Leg of the Rally Has Started. A Review of Our Strategy.

Since crude oil traded to negative prices, we have been writing a series of articles for our subscribers (some are unlocked for the public) – they are below. This is a continuation of the article series for the current price rally.

Trading crude oil is difficult enough, the technical analysis we will review here (including price resistance, support, retracement levels, time cycles, symmetry) and various other topics such as; Surprise Jobs Numbers, Fed stimulus, Corona Virus, OPEC and more.

The technical analysis for the legs of the rally have been spot on (as of time of writing the public can refer to the first 3 unlocked articles below on Apr 29, Apr 30 and May 2 – eventually they will be all unlocked), the trick is trading it.

In the most recent article on May 29 I was clear that I was starting to short the rally in advance of the key resistance in the 38.57 area on FX USOIL WTI and that doing so was not an easy trade and that if the rally continued in to the next leg that I would reverse the trade – this happened Friday morning.

From May 29:

The big challenge with this oil trade strategy is that I am trading against the wider trend, the trend is up and I am trying to position ahead of the turn down in oil, this is not a simple strategy to execute.

In the oil trading room and on the oil trade alerts feed Thursday / Friday I also had said that I was going to trade the rest of the decisions along with EPIC because I could see the decision coming.

Commentary from Oil Trading Chat Room and Oil Trade Alerts (there is also a live trading room with voice alerts and charting separate of this).

As the price of oil was nearing the key resistance area of the charting in this leg of trade EPIC software (as was I) was shorting the resistance. I was noting that a reversal trade was likely imminent.

Curt MelonopolyYesterday at 8:16 AM
EPIC is shorting 38.56 and will likely reverse above, booting up trading room.

And then when price breached the resistance area we reversed our short trade 3/30 size to 12/30 size long for the next leg of trade. Oil rallied on the day from there more than 100 points.

Curt MelonopolyYesterday at 8:40 AM
On the oil swing EPIC did reverse 12 contracts from 3 short released 4 so far trading 39.19, we’re in live room. Will release P&L as we go here so you can see what it is doing. 38.56 is the mark for sure for reversals.

Oil Trading Room Chat Screen Capture.

oil trading room, chat
Oil trading room chat room commentary on the reversal from short oil to long oil at decision #oiltradingroom
oil trade alert, trading room, profit loss
EPIC V3.1.1 reversal in crude oil trade today from short to long position at key pivot for next leg up in rally. #oiltradingalerts

Strategy, Time Cycles, The Fed, The Virus.

The image below provides an idea of what our oil trading alerts feed looks like as trade progresses.

The strategy for swing trading the oil price rally was long until key resistance areas are near as with what occurred on Friday. The other important part of this current area of the rally is that there was a mid time cycle for volatility occurring around the week of June 3 so we were being extra cautious with our long bias.

The mid time cycle would be an opportune time for oil to reverse in the rally, however, the Fed has once again brought in stimulus, continues to signal all kinds of magic money and signals the possibility of more, the world is re-opening after the initial COVID scare, a surprise jobs number was posted Friday and Trump is talking up virus vaccines ready which is almost guaranteed to have the rally continue.

This will all be on close watch however this week because quite often Fed stimulus, magic money talk, news flow in general is timed perfectly within market cycles (they are not stupid) and this can unwind fast, so we will be vigilant being long in this current leg of the rally – to say the least. 

oil trading alerts, swing trade
Oil trading alert feed screen image of alerts and various lead trader technical analysis for the swing trade in oil.

So What is the Plan for the Next Part of the Trading Strategy?

Some of the questions an oil trader needs to consider in planning for the week coming;:

  • Where is key resistance and support?
  • How to size at key resistance and support?
  • When to reverse the trade if it support is broken or resistance is breached?
  • When to add to the trade or trim the trade?
  • Key areas to trim size within each structure or range – position trading.

Lets Start With The Primary Simple Structure of the Oil Chart Trend Lines (for Part 1 public facing article).

Then in Part 2 for our Swing Trading and Oil Trade Subscribers we will go in to Swing Trading the Time Cycle Charts and Models (helps swing trade and position key areas of support and resistance, time and symmetry decisions which is key for sizing adds and trimming positions).

Then in Part 3 for our Pro Oil Day Traders (Oil Trade Subscribers) we will review the various EPIC Oil Algorithm Chart Models for Day Trading and Swing Trading decisions on a variety of time frames.

Part 1 – Simple Oil Charts for Swing Trade Strategies

The oil chart below is from 11:14:37 AM Thursday, crude oil was just holding on to the support of both the trading box of the “gap” on the one hour chart and the lower uptrending support. 

Oil Chart, trendlines
This is riveting to watch. Basic oil trend lines to watch.

And then Friday morning the surprise jobs number came out and oil rallied again to the top of the resistance on the simple trend line crude oil swing trading chart.

Shown below is the Simple Crude Oil Chart for the Gap and Trend lines.

oil, trend line, swing trade, chart
Simple Crude Oil Chart for the Gap and Trend lines #crudeoilcharting

So what is the Plan for a Simple Swing Trading Strategy for Crude Oil here?

You should be long at the key support areas of the chart, the horizontal trend lines that make up the “gaps” historically on the 60 minute chart and more importantly at the up trending trend lines which oil traders are obviously using to size their trades.

At end of week trade on Friday oil price was left at the resistance area of the upper trend line with another possible upper uptrend trend line and trading box “gap” resistance above.  

If oil fails to hold support or breaches the resistance areas of this chart you will need a plan – this we will cover in Part 2 and Part 3 of this article.

Below are some simple tips;

If oil breaches resistance look to the next resistance in your strategy and be sure that you are aware of how break-outs work paying close attention to previous resistance now support levels.

If oil fails support be sure you don’t get chopped up by death of a thousand cuts around the key support (in and out of trade taking small losses that add up) and you will need a plan for this also.

Knowing the order flow of intra day trade helps a lot (along with various other more technical indications which increase probability that you are on the right side of a move) which is why we have the oil machine trading software side of our business that our oil trading room and alert clients are alerted to. You can find the most recent EPIC white paper here:  EPIC V3.1.1 Crude Oil Machine Trade Software Update | June 4, 2020 White Paper #OOTT $CL_F $USO $USOIL.

In Part Two, “Protected: Part 2 of 3 – Swing Trading Crude Oil: Key Chart Considerations (Time Cycles, Symmetry, Support and Resistance Levels for Sizing)” we will look at more charting and strategies for our Swing Trading and Oil Trade Subscribers including time cycles, other chart time-frames, symmetry, support and resistance, sizing and more.

In Part Three, “Protected: Part 3 – Algorithmic Crude Oil Trading Strategies (Day Trading, Swing Trading, Position Trading, Time Frames, Models)” for our Pro Oil Day Traders (Oil Trade Subscribers) we will review the various EPIC Oil Algorithm Chart Models for Day Trading and Swing Trading decisions on a variety of time frames.

As always, any questions please send me a note via email [email protected].

Thank you.

Curt

 

Further Learning:

If you would like to learn more, click here and visit our Crude Oil Trading Academy page for complimentary oil trading knowledge – posts from our top crude oil traders that includes learning systems, blog posts and videos.

Welcome to NYMEX WTI Light Sweet Crude Oil Futures.

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Article Topics; How to, Swing Trade, Crude Oil, Oil Trading Strategy

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