Crude oil futures have been providing quite a bit of excitement the last few months. Most traders, myself included, like excitement when it comes to trading. It means two things: opportunities and risks.
The recent pullback in crude oil future prices present a buying opportunity, in my opinion.
Looking at the daily chart of crude oil below, you will see that I marked what I feel should be a support level for resumption of the upside move.
You will see I marked the 45.46 price level basis the October contract as my short term support. On the same chart, which is the daily chart, you will see I marked some possible targets on the way up, (namely 48.96 and 50.07) in case I am right.
I am also looking at the weekly chart below, which provided me with possible "short term bottom signal" -- see the blue diamonds in the chart.
The most important factor in my eyes is trade management, which consists of many things: Method of trading? Will I buy options? Sell options (write premiums)? Will I enter long futures with a stop? Where do I enter? Where is the stop? Do I use long futures along with long puts as possible protection? Perhaps options spreads?
Many more factors go into trading, including the very important questions of trade size and exit levels.
I like the possible forming set up on the long side of crude oil. Plan your trade, trade your plan.
If you are not familiar with the risks associated with futures trading and/or options on futures, I recommend you visit our broker assist services and get help creating a trading plan.
This article is commentary by an independent contributor.Trading commodity futures and options involves substantial risk of loss. Past performance is not necessarily indicative of future results.