July 08, 2024 at 12:20PM
Light crude oil futures technical analysis and trade idea, for short
👋 Hello traders and investors! This is Itai Levitan from ForexLive.com, bringing you the latest technical analysis and trade ideas for Light Crude Oil Futures. Let’s dive into the current market setup and discuss potential strategies for your consideration.
Oil futures trend analysis 📈
We are observing an interesting pattern with Light Crude Oil. Recently, oil pierced a significant trend line, attempting a breakout but ultimately failing. This breakout attempt was aligned with the first upper standard deviation of the Volume Weighted Average Price (VWAP) anchored from the beginning of 2023. Given this failed breakout, it appears that the bears might have an upper hand at the moment.
Market response at 84 USD TO 85 USD 📉
Following the failed breakout, we have seen an initial decline of over 1%. This movement is critical as it sets the stage for a potential entry point.
Trade idea – short oil 🎯
Entry point
Entry: $82.40
This entry point is very close to the current market price and provides a strategic position based on the recent technical behavior.
Stop loss
Primary stop: $84.00
Tighter stop option, see video above: $83.70
The primary stop is set just above the $84.00 level to protect against further upward movements. Traders preferring a tighter stop can opt for $83.70, which is still above the upper standard deviation but offers a more favorable risk-reward ratio.
Take profit targets
First target: $80.26
Second target: $78.16
Third target: $76.80
Fourth target: $72.85
These targets are strategically placed. The first target allows for partial profit-taking, reducing risk exposure as the trade progresses. Subsequent targets provide opportunities to capture additional profits as the market moves in our favor.
Risk-reward analysis
Risk-Reward Ratio: Approximately 4.5:1
By averaging out the take profit targets, we achieve a balanced and favorable risk-reward ratio. This setup allows for substantial profit potential while managing risk effectively.
Trade tips 📝
Monitor lower time frames if you still want to enter but saw this late: It’s essential to keep an eye on lower time frames to refine your entry point and ensure optimal timing.
Partial profits: Taking partial profits at different targets is a professional approach to secure gains and manage risk.
Adjust stop loss: After reaching the first profit target, consider moving your stop loss to the entry point to protect your position and minimize potential losses.
Remember, this analysis and trade idea is an orientation for you to consider. Always trade at your own risk and perform due diligence before entering any positions. Stay tuned to ForexLive.com for additional insights and perspectives. Happy trading!
Thank you for reading, and good luck! 🍀
This article was written by Itai Levitan at www.forexlive.com.
