Trade of the week: short WTI crude oil
Since December, the crude oil market has seen a significant rally. Discover trading strategies for WTI crude oil that present potential profit opportunities.
(AI video summary)
Previous Tesla trading outcome
In recent trading, a long position was taken on Tesla's share price based on an observed ABC corrective move. This pattern, which can sometimes predict market direction, was identified at a price around $417, with an upside target set at $500.
The strategy hinges on the potential for greater profit when the pattern holds true compared to the relatively small loss if it doesn't. Despite a slight increase the following day, Tesla's share price has since declined but hasn't hit the stop loss set at $373.10. This stop loss is strategically placed below the 2 January low, marking a critical point in the ABC correction.
Crude oil market trends and analysis
The crude oil market has experienced a notable rally since December, with prices trending upwards. However, current analysis suggests that crude oil may be approaching a resistance area.
Historical highs from November and December of the previous year could limit further upward movement in the short term. While the downtrend line has been breached, the December high of approximately $78 has not yet been surpassed, indicating potential resistance. This resistance is reinforced by earlier lows, suggesting a possible retest of the downtrend line before any significant upward movement.
This week's trading opportunity
Given the current market dynamics, the trade of the week involves shorting West Texas Intermediate (WTI) crude oil. The strategy is to enter a short position at around $77, with a stop loss set above $79.10.
The target range for this trade is between $73 and $74, capitalising on the anticipated resistance and potential price decline. This approach reflects a cautious stance, acknowledging the possibility of a temporary pullback before any sustained upward trend in crude oil prices. Traders are advised to monitor these levels closely, as market conditions can shift rapidly.
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.
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
Live prices on most popular markets
- Forex
- Shares
- Indices
