Crude Oil

Friday  31 May 2013

Stopped out at price 92.20

31 May – Buy 93.02
31 May – Sell 92.20

Loss = 82 tic, $820 plus $15 commission

We present three charts that describe this trade in which all
the rules for short-term trading were followed.   We mention,
“Anything Can Happen, often and for a reason.  This is one
of them.

Even following all of one’s rules and engaging in a trade that
appears to offer an edge, no one can ever know how the future
market activity will unfold.  It is part of the cost of doing
business.
The first sign of support, where Crude was at a 50% area of support in a trading range,
was when an apex formed.  It means buyers and sellers are in balance, and from balance
we can expect imbalance.  The best set-up is when volume declines as price moves into
the apex.  The imbalance breakout was to the upside, and it shows an area of support.

CLN 10m 31 May 13

Today, price declined an there was a retest around 8:30 in the morning.  What made this
attractive as a long side trade was the second retest that formed a downside failed probe.
This signifies price went lower, weak longs were stopped out, and no new sellers were
pressing the market lower.

All we needed was a show of strength to indicate a likely rally to follow.  That is where we
recommended long a half-long position, with a stop under the low probe.

CLN 10m # 31 May 13

All the rules were followed that would lead to a trade potential that offered an edge, the
edge being the support[s] mentioned and the confirming rally to buy.  There are never
any guarantees in trading, and we must accept what the market does and wait for the
next trade.

CLN 10 3 31 May 13

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