Volatility within a range

2022年6月13日

Here’s one if you like drama. Barely averting a strike in Norway, ongoing conflicts in Ukraine, the Saudis cutting supply to China, oil is in the middle of it all. With so much uncertainty, oil has been suffering bouts of volatility recently which presents an opportunity for trading.





Over the past month, crude oil futures seem to be trading within an ascending wedge. A bollinger band marks out the upper and lower range that prices have bounced off previously. When coupling this with Relative Strength Index (RSI), we see a recurring pattern where prices bounce off the lower bollinger band as RSI reaches the oversold levels. With current prices trading near oversold levels and the bottom bollinger band just a touch away, we see a bounce on the horizon.

Let’s stay patient and wait for confirmation from prices touching either the support of the ascending wedge or breaking the lower bollinger band before committing to the position.

Entry at 117.8, stop below 114.5. Target at 125.

Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.