Spotting A Leak In Oil
Even futures traders get in on the action with the Insights
From the War Room. Our team of analysts scroll the charts of the
futures contracts throughout the trading day to spot the best setups in the
commodities, for those who use those vehicles in their trading.
On Tuesday we alerted readers to a potential setup in the May
crude oil
(
CLK1 |
Quote |
Chart |
News |
PowerRating) contract.
12:08:25
Futures Alert
May crude oil (CLK1)
is pulling back from its recent low following a break of the neckline of a head-and-shoulders pattern. It is also hitting the 38.2% retracement of the leg
down. The contract is currently trading up 0.33 at 27.81 per barrel.
At this point the pattern is tracing out just
as it is supposed to. It is normal for the stock or future in fundamental
technical analysis to retrace to the area of the neckline upon a breakdown out
of a head and shoulders. When you get this important inflection point converging
with the level of a key retracement, you have to be alert for a turning point.
This is what Kevin Haggerty likes to refer to as an “alert zone.”
These are not strict or mechanical buy or sell signals, but rather something you
can follow for a change in direction.
Alert traders who are mindful of inflection points or
“alert zones” are often rewarded, as traders who were following the
crude contract were the following day.
Traders who entered short one tick beneath the Tuesday low were
able to grab the majority of a $1.06 per barrel drop in the contracts value.
Exiting on the close would have resulted in a one-day profit of just over $1000
per contract.
At TradersWire, we
are continually on the lookout for inflection points in stocks and futures every
day. I am certain when you begin to look for them and begin to “anticipate
the anticipators,” as Bernard Beruch said is key, you will notice the
difference in your trading success.
Until tomorrow,
Duke