The price of crude oil has been moving sideways between 95 and 125.
As a general rule, 90% of the time, I only trade once the price reaches key levels. In this case, the price is in the support zone. Therefore, I have looked for all the scenarios where the price was behaving similar to what it is now (we can define it as a triple bottom). Of course, in some of them, the price bounces, and in the other half, the price breaks it starting a new bearish trend.
The idea of today's post is to explain the scenario I'm considering trading. (Short scenario).
Let's start with the general context. In February 2022, the price reached the weekly resistance zone after Ukraine's invasion, and we observed clear reactions there.
I can define two zones that may work as potential bullish and bearish targets.
Bearish Target: 80.00
Bullish Target: 120.00
Now, let's look at the current situation. It's important to say that no one knows the direction the price may take; the following description is about a setup that I will only take if the price moves as expected.
I'm working on a short setup that looks as follows. Why? Because I have tested this situation in the past, and it's consistent in its resolution. The distance between the current support level and the weekly bearish target provides great bearish potential.
The main concept of this entry is waiting for the price to go below the support zone and then observing a pullback. IF that happens, I will set pending orders on a new low and stop loss at the end of the pullback. The target is defined in the next weekly support zone.
I will not be developing bullish setups yet because the filters I should be waiting for do not provide an acceptable Risk to reward ratio towards the next resistance zone.
Of course, this situation requires patience, and it's important to have clear filters to say, "Now I will set my orders." The risk I will be using on this setup is 3% of my capital on my stop loss; if everything goes as expected, this position should take between 20 to 45 days.
I hope this content was helpful; let me know your view in the comments!
As a general rule, 90% of the time, I only trade once the price reaches key levels. In this case, the price is in the support zone. Therefore, I have looked for all the scenarios where the price was behaving similar to what it is now (we can define it as a triple bottom). Of course, in some of them, the price bounces, and in the other half, the price breaks it starting a new bearish trend.
The idea of today's post is to explain the scenario I'm considering trading. (Short scenario).
Let's start with the general context. In February 2022, the price reached the weekly resistance zone after Ukraine's invasion, and we observed clear reactions there.
I can define two zones that may work as potential bullish and bearish targets.
Bullish Target: 120.00
Now, let's look at the current situation. It's important to say that no one knows the direction the price may take; the following description is about a setup that I will only take if the price moves as expected.
I'm working on a short setup that looks as follows. Why? Because I have tested this situation in the past, and it's consistent in its resolution. The distance between the current support level and the weekly bearish target provides great bearish potential.
The main concept of this entry is waiting for the price to go below the support zone and then observing a pullback. IF that happens, I will set pending orders on a new low and stop loss at the end of the pullback. The target is defined in the next weekly support zone.
I will not be developing bullish setups yet because the filters I should be waiting for do not provide an acceptable Risk to reward ratio towards the next resistance zone.
Of course, this situation requires patience, and it's important to have clear filters to say, "Now I will set my orders." The risk I will be using on this setup is 3% of my capital on my stop loss; if everything goes as expected, this position should take between 20 to 45 days.
I hope this content was helpful; let me know your view in the comments!