The last week in oil was exciting with prices breaking out and starting to run higher. The cup & handle pattern for oil can be seen best looking at the daily chart. The measured move for the price of oil looks to be around the $75 level and then $85 after that. The cup & handle pattern is one of most powerful bottoming patterns and I expect oil will trade higher for some time.
Weekly Oil Trading – How to Trade Oil (USO, USL) – Price of Oil
Daily Oil Trading
The daily chart shows a clear picture of the cup & handle pattern. During this pattern, we have had two buy signals. I like to wait for low risk entry points when risk is under 3% and currently downside risk for trading oil at this level, is around 8%.
Waiting for low risk entry points with clear exit points is critical for trading commodities. Every one can buy gold, silver and oil but most don’t know when to cut losses, take profits or when to add to a winning position. That is what I focus on when trading these volatile commodities.
Daily Oil Trading – How to Trade Oil (USO, USL) – Price of Oil
TheGoldAndOilGuy’s Trading Conclusion:
The commodities market has been extra volatile the past 9 months making it difficult to have low risk setups. We have been getting several buy signals but not as many setups to actually put money to work because risk has been over 3%.
I think these commodities gold, silver, and oil are poised for a nice move higher. I just want to mention I am not a gold or silver bug always thinking they will rally to ridiculous prices like $8000, which several forecasters are shouting out. I like to follow the price one - two moves at a time then review the current situation.
That being said, with the global economy not looking to hot, it puts gold and silver in a great situation. Countries, and private investors and traders are accumulating precious metals, as protection from falling currencies and will most likely continue doing this for some time, which will continue to push gold and silver higher.
If the broad equities market rolls over, I expect to see gold move higher with money moving into these safe havens. So, I think the odds are good for prices to rise over the next 4-8 weeks.
Oil appears to be in a similar situation. If oil prices continue to climb, I expect it will put a damper on the equities market, which will help push gold and silver higher.
While I would like to see prices move higher for all investment types, it’s important that traders and investors protect themselves from substantial loses. I focus on following price action, volume, momentum, risk management (Low Risk Setups), portfolio allocation and some fundamental data, but in my opinion most fundaments have gone out the window.
