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.
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