Trade of the week: short WTI crude oil
WTI front month crude oil futures are nearing key technical resistance we would like to go short in with a stop loss at 72.50 and a downside target in the 67.00 region.
(Video summary)
IG's Trade of the week presented by Axel Rudolph, video created on 4 November 2024.
Previous cotton and Arabica coffee trading outcomes
Traders recently went short on New York cotton front-month futures at 72.69, setting a stop-loss above previous highs at 75.58 and targeting a price drop to 68.50. Short selling cotton futures can be profitable during expected market downturns. This strategy highlights the importance of using stop-losses and target prices to manage risk and optimise returns.
Last week's focus shifted to Arabica Coffee futures, where traders saw an opportunity to go long around 251.65, expecting an uptrend following an ABC correction pattern. A stop-loss was judiciously placed at 240.70 to minimise downside risk.
Unfortunately, this trade resulted in a small loss after hitting the stop-loss point. Such experiences highlight the volatile nature of futures trading and underscore the necessity for disciplined risk management practices. Even with strategic analysis, market movements can be unpredictable, and managing risk is vital in cushioning against unexpected downturns.
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This week's trading opportunity
This week’s strategy involves going short on West Texas Intermediate (WTI) crude oil futures as they near a key resistance area.
The plan is to sell at resistance levels of 71.00 to 71.50, with a stop-loss at 72.50 and a downside target of 67.00. Understanding resistance and support levels can guide trading strategies and improve decision-making.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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