Mastering Crude Oil Intra-Day Moves – The Regular USA Market Open Provides Significant Range of Trade and Opportunity for Profitable Day Trades.
This in depth article series looks closer at trade strategies oil traders can use to gain an edge. We are currently coding these specific set-ups to our machine trading software.
Mechanical (human) traders can also learn from this process and use the methods in day trading, trend following and swing trade planning.
We hope to produce one article per week in this series.
Article Structure (Part 1, 2, 3…).
Each article will cover a specific oil trading strategy (set-up) and will include at least 3 parts.
- Part 1 – Public facing unlocked post that outlines the general trade set-up and generally how the set-up can be traded (in most instances this will include some conventional charting, the chart links for live chart sharing are included in Part 2).
- Part 2 – Premium member post (locked) that will explain in detail the technical set-up on conventional and algorithmic chart models and how to specifically execute each trade to gain an edge (timing each trade entry, sizing, trimming and adding to positions, technical indicators and more). We will also look at the week to come and how to plan your trading.
- Part 3 – Each trading strategy will include at least one follow-up article to review real world trading examples from our live oil trading room (live video examples with voice broadcast from our lead trader, chat room logs, live alert screen shots, order sizing, profit and loss and more).
Specifically in this article we look closely at the regular USA equity market open and how to day trade momentum during this important time in crude oil trade.
A List of Common Strategies Used to Day-Trade Crude Oil (Point Form).
There are a number of ways (strategies, methods) a trader can use and refine to gain an edge when trading crude oil. Some examples include and are not limited to;
- Trend Following / Swing Trading within trending price of oil on various charting time-frames within trading channels. For example, the price of oil has followed a channel on larger time frames (4 hour, daily, weekly etc) since December 24, 2018. The price of oil followed the channel from lows of 42.44 on December 24, 2018 to highs of 66.64 on April 23, 2019 (charted on FX USOIL WTI below). On Friday oil closed 61.69 to end the week. Price has been consolidating / moving sideways over the last week.
- Price Range Trading. Be prepared to take long trades near oil chart time-frame lows and shorting near the price range highs.
- Price Reversal Trades (Snap-Back Trades). Crude Oil Intra-Day Sell-offs offer a great opportunity for a reversal day trade long (with significant opportunity for gains intra-day, as do intra-day tops in price). The key is knowing how to trade this set-up.
- Technical Chart Trading – Conventional and Algorithmic Models. This may include trading Fibonacci levels, VWAP, MACD, Stochastic, Candle Stick Patterns, structured Algorithmic Models and much more.
- Day Trading Time-of-Day Trend Inflections during market event timing such as when regular equity markets open around the world. Specifically in this article we look at the USA regular equity day market open. There are other examples such as other global market openings, EIA at 10:30 AM Eastern on Wednesday (the crude oil inventory report), API report at 4:30 PM Tuesday, daily 2:30 EST settlement, 6:00 PM futures open and more.
- There are many other examples such as; inventory levels, summer driving season, tanker movement, Geo Political events, market sentiment and more.
Example – Day Trading the Regular Market Open Momentum Strategy. Lets Start with Reviewing Oil Trade From Last Week.
On Monday May 6 (to start the week) crude oil market open momentum set-up sees crude oil trade from 61.24 at 9:27 AM – 61.90 at 10:17 AM, a progressive increase in price from overnight futures session after a late week sell off the week prior. A 66 tick early day move in price.
The opportunity was a 66 tick move on a long side trade at open and then the retrace was as big of a move and then price ran after that through the rest of the regular trading session.
Just the open momentum trade and retrace (lasting just over an hour) was an opportunity for over 100 ticks. That’s a serious opportunity, and it isn’t unusual. In real dollar terms with one contract in CL that equates to a 1,000.00 USD (approximate) gain at market open (if you can learn to trade it predictably).
The one minute oil chart below shows the trade action at market open.
Monday morning was a long trade until 10:17 AM, the momentum started right before open at 9:27 AM, it was (in general on an intra-day time-frame) a follow-through momentum trade from overnight futures the night prior. Sunday night trade melted up after a sell-off late the week prior.
The overnight trend trade strategy will be dealt with in detail in a near future post. For now, the main takeaway here is to follow the intra-day trend until it breaks (generally speaking your bias should be toward trend).
In this instance, price then (after the overnight move and the market open move) went on to trend up through the regular day session for significant gains.
How to Trade It – Indications to Confirm Trading Crude Oil Long at Regular Session Open.
Lets look at some conventional charting indicators and then in the follow up Part 2 of this article we will take a close look at our algorithmic model indications that can help confirm direction of trade, sizing, range and more.
- Trade In Direction of Intra-day Trend. As above, intra-day trend was for a long bias in oil trade in to open.
- Chart Indicators. Conventional chart indicators for day-trading crude oil – Stochastic RSI, MACD, SQZ MOM, Volume, Momentum, Moving Averages, Candle Stick Patterns etc. The one minute chart provides perspective / confirmation of how difficult it is to day trade crude oil with only conventional indicators and conventional charting. The indicators and charting can help, but the indicators (such as Stochastic RSI, MACD, SQZ MOM) can also hinder bias. You’ll notice the selling retrace prior to open that started around 7:00 AM that the Stochastic, MACD and SQZ MOM all confirmed properly that price was selling off (albeit they are trailing indicators) but when price started to trade up they were at best indecisive. And when the regular market open came and price continued to trade up the SQZMOM was turning down, the MACD was indecisive and the Stochastic RSI moved up. Bottom line, it is not easy to use these simple charting indicators. Volume came in progressively in to open – that was a bullish signal and price was upside of all the moving averages (a positive sign for a short term bullish bias in a momentum scenario). All-in-all bias should have been to the long side, but it was no easy trade. Structured charting (conventional and algorithmic) provides a better road map with detailed support and resistance levels so that you can direct your trade accordingly. You can weigh important support and resistance against intra-day trade, sizing and various other decisions. Also of note, the candle sticks did provide some clue, like the long wick prior to selling, the double bottom and top candlesticks and so on. But they only provide clues and should carry little weight on a one minute time-frame.
- The Psychology of Round Numbers and Time of Day Trading. When price turned down at around 7:40 AM (nearing that time of day when traders start looking toward the US regular market open) oil was trading at 61.62 (which is just north of 61.50 and doesn’t provide for optimum range at open), optimum range is a full 100 ticks, 40 ticks isn’t consider a great open range and 50 ticks isn’t ideal so “lets sell off to 61.00 for a move to 62.00” is the general mentality of the mass. Yes, it can be this simple. Simple, yet difficult to execute. Then as 9:00 AM nears the price is now nearing 61.00 as it slowly sells down (trading at 61.09) and like magic you get two solid candles and the sell down stops. Trade then struggled with the 200 MA and also as it neared the previous premarket highs as the regular market open neared and then at regular session open price and volume drove the price of oil from 61.41 to 61.89. 61.89 is nearing 62.00 and selling pressure starts. Then price sells off and returns to the session open range once again. This is not an easy premarket, run in to regular market open, market open momentum and topping trade. Experts can trade it (especially with sophisticated models), but not easy even for an expert.
- Sentiment. After a brief pull back, crude oil then trades from 61.40 – 62.90 on short term geo political and market sentiment. 150 tick move.
- Range of Trade. Be aware of the near term historical range of trade. You can see on the 30 min chart below that crude oil trade found support at a key horizontal historical support and diagonal trend-line. and ran to a key price range resistance.The chart used is derived from the long term trend line chart shown below this one.
- Trading Price Channels. Below is the long term chart trending channel that has been consistently trading since Dec 24, 2017 and more recently come under pressure.
Another example is this simple 15 minute channel trend chart. This 15 min oil chart shows the move in Monday trade from the channel support to just over channel resistance.
- Chart Structures. All of the various charting provides trading structure clues for range of trade to weigh trade risk sizing against various support and resistance. In Part 2 of this article we look at the algorithmic chart models and other conventional charting for last week and the week to come.
Having a good handle on the charting for the specific time-frame you are trading is important. Conventional and algorithmic charting can be used. Also having a good understanding of market sentiment, general trade trend direction, market timing and more can help you win.
In Part 2 we dive deeper in to how to day-trade the regular session market open momentum. It will be sent to premium Oil trading bundle and stand alone newsletter members before regular session open Monday morning!
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.
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Curtis Melonopoly (@curtmelonopoly) is rated Top 250 Stock exchanges authority, covering also Mathematical finance and Economy of the United States
Article Topics: Day Trading, Crude, Oil, Trading, Futures, Strategy, Signals, USOIL, WTI, CL_F, USO, Market Open, Momentum
Trading Crude Oil Webinar Format and Itinerary
Welcome to our newest webinar series. In this series of webinars I will be covering everything I know about various instruments of trade that we focus in at Compound Trading Group.
This series is an attempt to consolidate what we have learned over the last few years in to a neat condensed package that will be recorded for our clients.
The primary goal is to provide simple structured trade coaching to our most probable actionable set-ups.
Our webinar series includes and will be presented in this order; Crude Oil, Swing Trading (April 8), SP500 SPY (Apr 15), Gold (Apr 15), Silver (Apr 22), Volatility VIX (Apr 22), US Dollar DXY (Apr 22), Bitcoin (Apr 29) and Day Trading Momentum Equities (Apr 29). All the webinars will be presented prior to the end of April 2018 (so yes, April will be a busy month for me).
The first in this webinar series is for Crude Oil Trade, the topic of today’s webinar session. The crude oil session is scheduled for 8 hours and the others listed above will be 2 – 8 hours depending on the specific webinar.
If you cannot attend, or if you are in attendance and miss part of the webinar don’t worry, the webinars are recorded. Attendees will receive a free video report after the webinar.
Today’s webinar will cover my strategies for conventional and algorithmic oil trade and charting, intra-day trading, short term swing trading, longer term swing trading, trade sizing, time cycles, key set-ups and much more.
I will explain in detail how I maintain a win rate of better than 90% in crude oil trade (live recorded in our oil trading room and live alerted to our members).
Limited attendance of 25 persons to allow me to take questions and converse as needed to be sure we cover the trading concepts in detail.
Itinerary / Format:
Access webinar in main trading room. If you do not have the link and password please email us.
Questions are encouraged. Please ask questions, this helps our lead trader structure the webinar discussion and flow.
Please use the chat box to list questions in point form. If you can, please list questions during each break (if you are afraid of forgetting your questions then go ahead and put in the chat box during the regular session).
The lead trader will answer questions upon return from each break.
Breaks will be short and regular through-out the day. Average break time 10 – 15 mins and we expect to take 3 – 6 breaks. There is no specific scheduled time for breaks to allow for breaks at each critical point of discussion (per below).
10:00 AM Webinar Start.
The format is a live voice broadcast with live charting in our main trading room.
- Review question and answer format, breaks etc.
- Review other study resources; Discord private server, Oil Trading Blog, Crude Oil Trading Academy Web Page (the articles on this list are a must), You Tube, Previous Webinars, Trade Coaching (private and events).
- Review Mar 23, 2019 Client Memo – Crude Oil Trading Strategies With Highest Returns | Important Introduction | Private Client Series.
- Deconstruct the Trading Process Required to Achieve at Least an 80% Win Rate and a 2% Per Day Account Build in Crude Oil Trade.
- Use the Oil Algorithm Structured Models.
- Before you trade at all on any given day review the key support and resistance (trading range) of the Monthly, Weekly, Daily and 4 Hour Crude oil charting models. Define the ranges, review the trend and note the ranges or set alarms for the ranges. These are key for using the 30 minute and 1 minute models reviewed below.
- Lets get ready for this weeks trade. A run through of each chart model. Simplifying our levels and set ups for predictable trades. How to chart each time frame.
- Most probable trade set-ups (structures).
- See this previous post (and others) for examples Protected: Strategies for Day Trading and Swing Trading Crude Oil | Premium Member Newsletter
- Quad walls / channel support and resistance, mid channel lines, primary Fibonacci support and resistance.
- 1/4, 1/2 and full timing structures.
- Secondary set-ups such as end of week price targets, price targets for API and EIA.
- Price target locations on the model for intra-day indications of trade trajectory.
- Swing trading weekly range on model.
- Short term swing trading intra-day range on model.
- Day swing trading current intra-day structure.
- 30 Minute Candles.
- Trading range within body of candles.
- The 30 minute candle turn.
- Using the One Minute Model and other time frames.
- Order entries, sizing, closing trades.
- Specifically when to enter, when to size, when to trim and close each trade.
- Primary support and resistance on other time frames.
- Symmetry on chart models.
- Timing and Fibonacci on the one minute model.
- Order entries, sizing, closing trades.
- Time Cycles / Timing.
- API, EIA, regular market openings, lunch hour, 30 min quad and channel range, one minute time cycles.
- Intra-Day Trade Action to Signal Set-Ups.
- Intra day trend / momentum.
- Recognizing the intra-day structure of trade and when the momentum changes.
- Recognizing the key areas of intra-day trade action for highest probability trades and largest range of trade.
- Sell-Off Structure / Snap-Back Structure.
- Waterfall (Bearish) Structure / Trade Action and Bullish Trade Structure and Action on 1 minute time frame.
- Other set ups as time allows.
- Use the Oil Algorithm Structured Models.
6:00 PM Webinar Completion
Post webinar follow-up: the goal is to provide a plan for our attendees to execute the highest probability set-ups in crude oil for the coming week. Please send our lead trader an email approximately one week following the webinar with your trading success, failures and observations (thoughts) from the previous week. This will help you stay on track for the next week and will assist us in helping you with your trading journey.