My last article was titled "Crude Oil at $100: Could that be on the Radar?" real quick! Well, here we are continuing to see this impressive trending rally in Crude Oil Futures. In fact, as I am typing this paragraph crude oil futures are breaking out of a one-hour bull flag with elevated volume. Now that the blood is boiling with the shorts screaming for help; How can traders take advantage of this short squeeze to ride crude oil futures higher?
First, I look at the sixty-minute Crude Oil Future Chart to get an idea of how price action is reacting for a two week look back period. What I see is buying on elevated volume aka demand and when crude oil futures trade sideways there is a lack of sellers on light volume. This is extremely bullish because sellers have no power to push crude oil prices lower. Therefore, as crude oil continues to tick higher, the Sellers are forced to cover setting up a short squeeze to the upside.
I want to showcase two charts both from this morning one is from the potential breakout of the bull flag. The other chart showcases the power of a short squeeze one hour later on the sixty-minute chart.
The green volume bars below show the power of demand for Crude Oil Futures. The red bars show supply. As we see from the chart even when supply is shown the crude oil futures continue trading sideways continuing the upward trend.
One thing traders should take note that there is a tendency for commodities to usually trend slow and steady like a marathon runner. Compared to stocks in which the price movement is more like a sprinter moving fast in one direction, stopping, and reversing. Therefore, as crude oil futures continue to print higher this price action favors the trend trader compared to the NFLX stock trader. Remember it is important to identify in what kind of trader you are. Just because your buddy Jack day trades stock, you may favor something slow and steady with a limited risk vs. reward set up. Always know your risk tolerance and trade with a plan!