The last time we looked at oil, we figured the price of the gooey black stuff was headed for a big move. We just weren’t too sure of whether the move would be higher or lower.
As it turned out, it went both ways.
Look at this updated chart of West Texas Intermediate Crude (WTIC) we first showed you about one month ago…
Now, oil is approaching the downside target of the triangle pattern, near $51 per barrel (the bottom red line). That has been the support level for the past few months. So, we now have another opportunity for a low-risk trade in oil.
You see… commodity prices tend to stick within a well-defined trading range for long periods of time. So, in the world of commodities trading, the rule is to buy support and to sell resistance. And, you just keep doing that, over and over again, until it doesn’t work anymore.
For the past several months, oil has been stuck trading between about $51 per barrel and $60 per barrel. Traders could have done pretty well just simply buying oil whenever it dipped down towards $51 and then selling it whenever it popped up to $60.
Well… all of a sudden, the price of oil is drifting back down to its support line near $51. So, traders can look to buy oil here at about $52 per barrel in anticipation of a bounce back up to the top of the trading range.
If oil breaks support and starts to trend lower, traders can exit the position on a move below $50 or so and keep the loss relatively small. And, if oil holds support and bounces higher from here, then traders can look to take profits as it approaches the upper end of its trading range near $60.
At the current price of about $52 per barrel for oil, traders are risking $2 for the chance to make $8. That seems like a pretty good risk/reward setup to me.
Best regards and good trading,
P.S. I see plenty of downside ahead in the stock market. And I’ve been very clear with readers that I see something even more ominous on the horizon…
Investors could lose it all as the market crashes. But traders don’t fear market crashes. In fact, we get excited for them. As scary as they seem, they are a goldmine for trading profits… Especially if you use my strategy.
That’s why I’ve put together a brief presentation for you. And it’s not something you’ll read about in the mainstream media…