Plotting and Planning the Next Swing Trade in Crude Oil

May 3, 2015: 12:53 PM CST

Crude Oil traded powerfully up to a known resistance target, and we’ll plan our next trade (or even series of trades) based on this key level and the new targets for the next price swing.

Let’s build the case from the Monthly Chart down to the Daily Chart:

While not to the same magnitude or price distance, late 2014’s collapse is similar to the late 2008 collapse.

The reversal bottom at the beginning of 2009 led to a powerful rally up from $35.00 toward $70.00.

At this point, we’re monitoring a possible similar repeat pattern where price once again moves toward the underside of $70.00 – the upside target.

However, price faces a critical resistance target challenge here into $60.00 as we can see above.

The 200 month moving average (red) intersects price just above $60.00 and we’ll begin our planning there.

Crude Oil’s Weekly Chart – as I highlighted to Weekly Intermarket Strategy Members – has clear reference levels and trade planning.

The curling 20 week EMA rests near $56.00 and will be a support-pivot reference.

As long as oil maintains above the $55.00 level, it should be deemed “bullish” and this bullish thesis would be confirmed with a new trigger break beyond $60.00.

Note the “Open Air” pathway for price to move higher toward the $70.00 level which is the confluence of the 38.2% Fibonacci Retracement as drawn and the falling 50 week Moving Average ($69.00).

The logical bullish expectation would be to trade a continuation price swing higher “up away from” $60.00 toward the $70.00 level either as a swing trader or intraday trader capturing smaller bull flags or bullish opportunities on the pathway higher.

Of course, a bullish outcome is NOT guaranteed, so we’ll again use $60.00 as the resistance reference and $55.00 as an “Alternate” thesis outcome trigger (if price is to trade up toward $70.00 with minimal interruption, it shouldn’t trade first under $55.00).

Here’s additional planning on the Daily Chart:

Start first with the $60.00 reference level.  Price is perhaps likely to trade slightly down from this target level potentially toward the $55.00 confluence mentioned above.

Oil would be a bullish buy either on a “surprise” trigger breakthrough above $60.00 (without a retracement – it would signal price strength) or on a retest that touches the $55.00 level as support.

Once again, a trigger-breakdown under $55.00 is an alternate thesis bearish outcome that would suggest caution.

Otherwise, we see again another upside target level into $70.00 – it’s the falling 200 day Simple Average.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Plotting and Planning the Next Swing Trade in Crude Oil”

  1. Bracewell Says:

    If we plot things and plan well then we can get great success, but if we are not able to do that then we might not make too much profits. I am trading with OctaFX broker and their conditions really help me plot a perfect setup while also helps me in planning, it has low spread of 0.2 pip, high leverage up to 1.500, it also has wonderful customer service that’s active 24 hours, so that’s why it is so great to be working with them and that makes them so special.