Triggers 'n Trends for August 8th

Aug. 8th., 2009 By Robert Tovell CTA

Contract: Sept. Crude Oil
Action: Buy
Trigger: 72.85
Initial Stop: 70.35
1st Target: 73.48
2nd Target: 74.12
3rd Target: 75.38

Oscillator (wkly): Bullish
Oscillator (dly): Bullish

Signal Expiry: 24 hrs.

Weekly Crude Oil Chart

The weekly chart is pretty self-explanatory. The oscillator turned bullish about 3 weeks ago, but it wasn't until this week that prices followed. The weekly, long term outlook for crude is bullish. The daily chart is a little trickier. There is strong resistance up around the 72.80 area. It is going to take a strong push to break it. My guess is that push will come in the form of an even weaker dollar. The next big down day for USD might just do it. That being said, both prices and the oscillator are trending higher however both appear to be slowing down a tad - which of course makes sense as we are at the high end of the price range. (See blue box on momentum chart) Even though I have a BUY on this market, I suspect prices to waffle around in its current range for a day or two yet, perhaps dropping down to the 67.00 - 69.00 level before it takes off (if it's going to take off) Perhaps, if we are lucky, we may get a signal to buy at a better price, but in the meantime, the current trigger looks ok.

Daily Crude Oil Chart

Crude Oil Momentum

This is the chart that has me "thinking" prices just might go up sooner than later. Granted the oscillator is trending down, and prices are below their ma, BUT, but prices themselves have remained in a very tight range all week - that is typically strong. (Blue arrows) Monday and Tuesday should tell the tale. Prices will either break down to test daily chart support levels, or the oscillator will turn bullish and we get the sharp rise we're looking for. If the latter occurs first, run to the blog for an update. We will likely need to employ some sort of Break, Hold, and Go strategy to get on it at or near the Trigger price as the advance will likely begin in Asia or Europe while we're all still asleep.

ALWAYS REMEMBER, IF AT ANYTIME YOU ARE FEELING NERVOUS ABOUT A TRADE YOU ARE IN, FOR WHATEVER REASON, GET OUT. IF YOU ARE HAPPY TAKING A SMALLER PROFIT THAN RECOMMENDED, TAKE IT - YOU CAN'T GO BROKE TAKING A PROFIT. IF YOU'D LIKE TO LET A WINNER RUN, BY ALL MEANS, JUST KEEP THAT STOP TIGHT. IF YOU ARE UNCOMFORTABLE WITH THE STOP/RISKS ON ANY TRADE - DO NOT TAKE IT. TRADING SHOULD ALSO BE FUN, NOT A SEETHING CAULDRON OF STRESS.