Stock, Option and Futures Trading
CL is bullish
June 9, 2011
We did a video for our members when CL was around the $98.00 level on 5/24 saying that we had our short term target at $102.90 and we hit that target on May 31st. Not only did we have that target our flow of the pattern had CL pulling back down into the $98.00 level again and then a move to the $105.00 which we are still in that leg now.
You can see from our Kill Zone chart from the $102.90 level CL turned red all the way down to the next $98.00 buy level. Once CL comes into that buy zone we wait for the bars to turn back to green to enter the long trade. Our stops are right below the last structure low which in this case was 1.4 IF you waited for the first green bar to print and buy the next bar as it broke the green bar high so that is worse case fill at $99.20
A risk of 1.4 to potentially book 5.8 and the 5.8 is only our first target. At the close of today you would be up 2.5 or $2,500 per contract.
CL is at a short term resistance and the way we trade there is usually another entry which would be if CL pulls back to the $100 level from where it is now. If you are trading 2 contracts where CL is now you could take one off and look for the second entry to add back in or just hold both going for the $105 target. In our opinion multiple contract traders should scale out and use the scalper contract to position yourself for a risk free trade and have the opportunity to jump back in to make more that what the first contract could make.
Even if you are not a swing trader knowing how we get to the conclusion of taking our swing trades is exactly how you would do it on the 10 minute chart. Also once you know the bigger direction of the symbol you are trading you will have much higher odds of making money day trading because you will know the direction so you can take your trades with the bigger trend and have more confidence to hold your day trades. Whats the use of entering the trades if you do not hold them?
Bigger picture CL could go to $121 so for right now we are not trading CL short. Sure, there will be moves to the downside during the some days nothing goes straight up or down but we would know ahead of time that any short is counter trend and if we do take them we would use the counter trend rules.
PS. We will be out of the office starting tomorrow and returning on the 18th.