Trader Vic's simple but effective 1-2-3 Trend Indicator is a great tool to add to your trading toolbox. We are seeing this setup take place right now in CL.
It goes as follows:
1 - Break a Trend line that has been in force - CL did this last night with multiple hourly bars closing over the Down trend line connecting the highs from May24 through Friday.
2 - After this break, all of the traders who have been shorting step in to wack it again, pushing us back into the channel. This has now happened this morning.
3 - However, instead of continuing to new lows, price now makes a higher Low & again begins to climb. This is in process now with a higher low made @ 42.63, and we have rallied above 43.
A move above 43.65 will confirm the Intermediate Trend Reversal.. I like to see at least 2 hourly bar closes above that level for confirmation.
We already have 1 CL trade on from last night and will be adding to this once the 1-2-3 is complete.
As we are targeting the $46 range which is the 38% Fib retrace, the way we want to play this is as follows:
1) Buy 1 44 call which will cost you around $1.05 if price hits 43.50..
2) Sell 1 42 put which will get you around $.55
3) Wait for a move above $44.50 AND THEN sell the $46 call which should net you .50 cents or so.
In the event Crude reverses and takes out the 42.63 low close your position.. You will have lost approx $.75 net on the first 2 legs of this trade. Our potential profit is $2, so you are looking at 2.75-1 R/R here.
Good Trading
It goes as follows:
1 - Break a Trend line that has been in force - CL did this last night with multiple hourly bars closing over the Down trend line connecting the highs from May24 through Friday.
2 - After this break, all of the traders who have been shorting step in to wack it again, pushing us back into the channel. This has now happened this morning.
3 - However, instead of continuing to new lows, price now makes a higher Low & again begins to climb. This is in process now with a higher low made @ 42.63, and we have rallied above 43.
A move above 43.65 will confirm the Intermediate Trend Reversal.. I like to see at least 2 hourly bar closes above that level for confirmation.
We already have 1 CL trade on from last night and will be adding to this once the 1-2-3 is complete.
As we are targeting the $46 range which is the 38% Fib retrace, the way we want to play this is as follows:
1) Buy 1 44 call which will cost you around $1.05 if price hits 43.50..
2) Sell 1 42 put which will get you around $.55
3) Wait for a move above $44.50 AND THEN sell the $46 call which should net you .50 cents or so.
In the event Crude reverses and takes out the 42.63 low close your position.. You will have lost approx $.75 net on the first 2 legs of this trade. Our potential profit is $2, so you are looking at 2.75-1 R/R here.
Good Trading
$1.10 on the 44 call & we received .53 on the $42 put for a net cost of .57