To call this ride crude oil has been on “wild” is clearly an understatement. From prices trading at nearly NEGATIVE $40.00 a barrel when approaching expiration of the May contract, to the Saudi & Russian price war, pared with the global economic shutdowns generating over supply and completely depleting demand – to a historic comeback of prices rallying nearly 90% during the calendar month of May. This year thus far has undoubtedly been the wildest ride of my trading career!
The craziest part of all of this is the insane opportunities the market continues to present. To think looking back that I’ve made less money in calmer seas than these rough unpredictable times makes this all that more exciting. Adversity often presents opportunity, and that’s exactly what is happening throughout all of this craziness.
I suspect the crude oil market is most likely coming due for a short-term correction. A base of support is much needed to be formed which the market is currently lacking. The July contract has been rallying on average approximately $4.00 per week to the upside for the past 4 straight weeks in a row.
I believe the market will have a greater chance of following through with it’s current rally trajectory if along the way there are bottoms placed and solidified. The $36.00 – the mid $37.00 price area will likely determine if this rally has a pullback or if it continues on its current upward path.
If buying strength weakens we could see a healthy correction to as deep as the $26.00 price area. This formation of a secondary, higher bottom would confirm buyer’s interest in driving this current rally onward and upward.
If the $31.00 price area is broken through, the $26.00 price area will most likely be able to contain remaining selling. The next 2 bullish target’s I’m looking at are at the mid $37.00 price area and further to the upside between the $39.00 – $40.00 price area.
There is a confluence of intraday upside resistance / supply that would need to be successfully broken through on multiple timeframe Hawkeye Zones at $37.33 – this break would be key to see the next suspected upside target at the $39.00 price area.
Check out this week’s Crude Corner Passive Breakout Trade Idea(s) offering both bullish and bearish scenarios. This strategy suggests 3 contracts for each trade. 1 Stop with 3 Targets. If there are open position(s) at 1400 EST on Friday or on the last day of the trading week, I would recommend closing them out before the weekend.
PLEASE NOTE: I would strongly recommend the use of confirmation tools and the implementation of your unique trade management plan before entering any trade.
“Strive not to be a success, but rather to be of value.” ~ Albert Einstein
Wishing you a blessed and profitable week!