Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.
Trading positions
- Crude Oil [CLZ21] Long around $78.57-79.65 support (yellow band) – with stop below $76.48 and targets at $81.80 (hit!) and $83.40 – Entry and first exit triggered! (See Fig. 1)
- Natural Gas [NGX21] Long around $5.268-5.361 support (yellow band) – with stop below $5.070 and targets at $5.750 (hit!) and 5.890 (almost hit!) – See last edition…
Did you miss my last article about the spiciest MLP to trade? No problem, you can have a look at my selection through the dynamic stock watchlist.
Was the adage "buy the rumor, sell the news" also verified with that new trading position?
It was Thursday (Nov. 4) that the following rumor had flourished: a possible coordinated action which was supposed to consist of drawing on the strategic reserves of several countries, including the United States, which were leading the dance.
Meanwhile, our subscribers were just getting ready to go long around the $76.57-79.65 support zone (yellow band), with a stop placed on lower $76.48 level (red dotted line) and targets at $81.80 and $83.40 (green dotted lines).
As a result, oil prices had contracted in stride (trading just into our entry area), just before the rumor effect faded shortly on Friday (Nov. 5), to push them back up.
In fact, with oil prices picking up momentum on Friday, once again settling firmly above $80 per barrel, and with a market still showing doubts on the possible use of strategic crude reserves, the proposed trade entry on the black gold, triggered on Thursday – following my last post – was thus profitable since it already turned into a partial profit-taking at the end of the week.
Then, on Saturday, Joe Biden said that his administration had the means to cope with the rise in energy prices, in particular after the OPEC+'s decision not to raise their production to more than 400,000 barrels per day. in a context of global imbalance between supply and demand.
In addition, Joe Biden also insinuated that the organization (and its allies) might actually not do its best to pump enough volume of crude oil.
Trading Charts
Chart – WTI Crude Oil (CLZ21) Futures (December contract, daily chart)
Now, let’s zoom into the 4H chart to observe the recent price action all around the abovementioned levels of our trade plan:
Chart – WTI Crude Oil (CLZ21) Futures (December contract, 4H chart)
In summary, my trading approach has led me to suggest some long trades around potential key supports, as this dip on crude oil offered a great opportunity for the bulls to enter long whilst aiming towards specific projected targets. By the way, for those interested in Forex trading, please note that I am currently preparing some new series about the co-existing links and relationships between commodities and currencies.
Stay tuned – happy trading!
As always, we’ll keep you, our subscribers well informed.
Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
