Good morning team,
We are taking a look at crude oil this morning. Due to corona-virus restrictions and lockdowns coming back into play across the EU and UK the demand for crude oil will no doubt decrease. The recent rally in the USD will also weigh on global commodities. We are not expecting the same level of selling pressure seen during the previous covid-19 lockdowns when Crude oil dropped to 0, however, there is potential for some further downside here.
The fundamentals and technical align with this set up giving it the green light for a position.
Crude Oil – 1 Hour Charts
From a technical perspective, there is potentially a head and shoulders formation in play. On the shorter-term time frame, the market has also broken a bear flag structure suggesting further downside. We are waiting for a retest of the bear flag formation.
Trade Setup: SELL Market Execution – current price 39.53, stop loss 40.73 and take profit targets can be found at 37.43 (neckline), we will then wait to see if the market breaks lower.
Stop loss: 120 pips
Take profit: 210 pips
Contract size of 1 = $1 USD per pip (00.01) on Focus markets. Please check the specification, it will change depending on the provider.