Jim Wyckoff
2 min read
In This Article:
September crude oil futures (CLU25) present a selling opportunity on more price weakness.
See on the daily bar chart for September Nymex West Texas Intermediate (WTI) crude oil futures that prices have seen a big downdraft from the June high and have now paused. This price action has created a bearish pennant or flag pattern on the daily bar chart, suggesting a bearish downside “breakout” from the pattern may occur soon. See, too, at the bottom of the chart that the moving average convergence divergence (MACD) indicator has recently produced a bearish line crossover signal, whereby the red MACD line has crossed below the blue trigger line.
Fundamentally, the significantly decreased tensions in the Middle East, including the prospect that Iran could start to pump more oil due to easing U.S. economic sanctions, are price-bearish for crude oil, suggesting more supply on the world market. The shaky global trade situation at present also raises concerns about slowing energy demand growth due to worries about a resumption in global tariff exchanges.
A move in September crude oil futures prices below chart support at $62.84 would become a selling opportunity. The downside price objective would be $55.00, or below. Technical resistance, for which to place a protective buy stop just above, is located at $66.00. Importantly, the micro WTI crude oil futures contracts are popular among retail futures traders and have seen significant growth since their introduction in July 2021. These contracts are very liquid and are one-tenth the size of regular WTI crude oil contracts.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
