We have been bullish Crude over the past 2 weeks and currently have nice profits on 2 of our prior entries.
Yesterday we saw a wide ranging day close down on heavy volume, and this is a warning signal that should catch our attention. Over the prior 3 months we have seen 2 similar candles, which then proceed to form a bear flag with ascending price on lower volume that fails to take out the prior high.. Once price penetrates the lows of the flag, we see another leg lower. We must avoid this scenario to protect our gains.
Currently bulls still have the upper hand, and I don't believe this current rally has caused enough pain to the shorts yet. As a matter of fact yesterday shows that bulls are skittish ^ bears are still emboldened.
With the EIA report coming up, the usual wild stop hunting algo whipsaw action is to be expected. However, we want to have a gameplan to protect our gains, or continue to press our advantage.
Action to take:
Close out all Long positions on a hourly close below 45.20 (today's low) or
Add 1 unit on a hourly close above 46. You can sell the Aug 48call for $1.06 - The Delta is currently .37 on this option. Your upside on the covered call is $3.06. You should close out this additional unit on a move below 45.20 which would cost you approx .70. This gives you a 4-1 R/R setup.
Good Trading to all.
Yesterday we saw a wide ranging day close down on heavy volume, and this is a warning signal that should catch our attention. Over the prior 3 months we have seen 2 similar candles, which then proceed to form a bear flag with ascending price on lower volume that fails to take out the prior high.. Once price penetrates the lows of the flag, we see another leg lower. We must avoid this scenario to protect our gains.
Currently bulls still have the upper hand, and I don't believe this current rally has caused enough pain to the shorts yet. As a matter of fact yesterday shows that bulls are skittish ^ bears are still emboldened.
With the EIA report coming up, the usual wild stop hunting algo whipsaw action is to be expected. However, we want to have a gameplan to protect our gains, or continue to press our advantage.
Action to take:
Close out all Long positions on a hourly close below 45.20 (today's low) or
Add 1 unit on a hourly close above 46. You can sell the Aug 48call for $1.06 - The Delta is currently .37 on this option. Your upside on the covered call is $3.06. You should close out this additional unit on a move below 45.20 which would cost you approx .70. This gives you a 4-1 R/R setup.
Good Trading to all.