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Chart Of The Day: Why We're Still Bullish On Oil

By Investing.com (Pinchas Cohen/Investing.com)CommoditiesMay 10, 2022 21:32

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By Investing.com (Pinchas Cohen/Investing.com) | May 10, 2022 21:32

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Oil traders have had a challenging ride and must be feeling severe whiplash. As the European Union tries to boycott Russian oil, the industry is undergoing the most significant change since coronavirus lockdowns forced contracts below zero in April 2020.

Oil Daily

We started off with a bearish pattern, which turned into a bullish development. Then, we thought the bullish pattern blew out, turning bearish again. Then, we observed that trading lacked leadership and the pattern was losing all meaning, which led us to wait for a "succession of peaks and troughs to feel confident about the trend."

After that, we identified that the pattern had extended and was still relevant.

Finally, we regained our bullish posture, arguing that the market uncertainty should boost, not lower, prices after the price penetrated the topside of the triangular range.

We have recently increased our call after the WTI price made a new low and new peak for the same length of time since developing the triangle.

Moreover, crude could be developing a small bottom, completed when the price rises above 112.00.

Trading Strategies

Conservative traders should wait for the price to penetrate and accumulate above 112.00 before risking a long position.

Moderate traders should wait for a new high above the May 5 high of $111.34 and then operate according to their strategy.

Aggressive traders could go long now, as the price struggles against the top of the triangle, providing an ideal entry from a risk-reward perspective.

Trade Sample

Entry: $101
Stop-Loss: $100
Risk: $1
Target: $111
Reward; $10
Risk-Reward Ratio: 1:10

Note: The above sample is only for aggressive traders who know what they're doing. Money management is as vital as sound analysis than sound analysis. Trading is not about knowing the future but navigating a changing market and trying to hold on to each move as long as possible. The more consistently and the longest a trader trades, the increase the odds of siding with statistically positive outcomes.

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Chart Of The Day: Why We're Still Bullish On Oil

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