Crude Oil (USWTI) – BUY LIMIT – 23rd March – UPDATED

Crude Oil (USWTI) – BUY LIMIT – 23rd March – UPDATED (Closed)

23rd March – Update

Good morning Forex Kings,

This morning global indices continue their declines as more economies come to a stand still. Tragic news coming from Italy as their death rate reaches almost 10%!. Here in Australia, VIC and NSW have been ordered to remain inside for any unessential activities. This is the beginning of a much needed shutdown/quarantine. Looking at China, this was the only method in preventing an even further spread of the corona-virus.

As Australia appears to be intervening early, our economy faster recovery than other nations. The US, Italy, France, UK and Spain are all increasing at a very alarming rate.

What does this mean for Crude Oil prices?

The more countries that go into isolation the better. Yes Crude Oil prices may drop initially, however soon the markets will be looking at the flattening of the virus growth rate curve, and then the number of recoveries. If the number of recoveries begins to accelerate we will see an uptick in all global indices and Oil prices as supply and demand will begin to pick up.

This does not mean oil will not go any lower than the current price, however our strategy is to hold a crude oil trade, and to add an additional trade from a lower area if it breaks lower.

Crude Oil – Weekly Charts

We are going to stick to the trade set up posted last week. Continue reading for more info!

10th March Update

We find ourselves at a major cross roads across the financial markets.

Global indices are now testing a crucial area on the weekly charts, the Dow Jones and SP500 are on the 200 day moving average.

Crude Oil was in free fall dropping over 20% as the Saudis started a price war. The Saudis have driven down the price of oil to price out their competitors. This makes their cheap crude exports more appealing to importing nations, however this is at a time when oil demand is at record lows due to the corona-virus outbreak.

If the price of oil drops below $30 per barrel and remains there, it makes it extremely hard for US oil producers to continue production as profitability becomes very small. The US oil market is in danger of going bust so to speak. Therefore it may be unsustainable for prices to remain at these lows for a long duration. We will be looking to position buy orders at key levels.

Technical Analysis

Crude Oil – Weekly Charts

22.90 appears to be a key level on the charts (161.8% FIB extension). This is also inline with the descending wedge formation.

Trade setup: BUY LIMIT – Entry price 22.85, stop loss 19.50 and take profit left open to run – targeting at least 30.00.

Stop loss: 335 PIPS

Take Profit: 705 PIPS

Crude Oil = 1 contract = $10 USD per pip (synergy)

0.10 contract = $1 per pip (synergy)

 

*UPDATE* The strategy below is based on Everforex 1 contract = 100 (Synergy markets is different, 1 contract = 1000)

 

This is a run down of my full trading strategy for crude oil. Risks and rewards are outlined below.

Strategy 1:

BUY ENTRY 1

22.50 – 2 contracts (Everforex) 0.2 Contracts (Synergy) = $200 USD per 100 PIPS ($2 PER PIP)

If the market drops to 12.50 our trade would be minus $2000 USD

Second entry point 12.50

BUY 2 contracts (Everforex) 0.2 contracts (Synergy) = $200 USD per 100 PIPS

If the market drops to 6.50 = 600 pips = minus $1200 USD

FIRST ENTRY 22.50-6.50

2 contracts (Everforex) 0.2 contracts (Synergy) from 22.50 – 6.50 = 1600 PIPS

Total drawback on first position = $3200 USD

Second entry drawback from 12.50 -6.50 = $1200 USD

Total drawback from 22.50 -6.50 = $4400 USD

Take profit target at 40.00

Profit on entry 1 = $3500 USD

Profit on entry 2 = $5500 USD

Take profit target at 50.00

Profit on entry 1= $5,500 USD

Profit on entry 2 = $7,500 USD

 

Strategy 2:

BUY ENTRY 1

22.50 – 3 contracts (Everforex) 0.3 contracts (Synergy) = $300 USD per 100 PIPS

If the market drops to 12.50 our trade would be minus $3000 USD

Second entry point 12.50

BUY 3 contracts (Everforex) 0.3 contracts (Synergy)= $300 USD per 100 PIPS

If the market drops to 6.50 = 600 PIPS = minus $1800 USD

3 contracts (Everforex) 0.3 contracts (Synergy) from 22.50 -6.50 = 1600 PIPS

Total drawback on first position = $4800 USD

Second position drawback = $1800

Total drawback from 22.50 – 6.50 = $6600 USD

Target at 40.00

Profit on entry 1 = $5,250 USD

Profit on entry 2 = $8,250 USD

Target at 50.00

Profit on entry 1= $8,250 USD

Profit on entry 2 = $11,250 USD

 **Keep in mind many traders are also looking to hold oil to $0 per barrel as well. Make sure you have calculated all risk and are prepared to hold all draw-down if you use these strategies **

 

It is down to you to plan your risk per trade within the strategy. Adjust position sizes to fit your own risk.

You need to check SPECIFICATION – The contracts will vary depending on who you trade with.

Trade Setup
BUY LIMIT

Entry
Check Strategy

Take Profit
Check Strategy

Stop Loss
Check Strategy