Oil has reached an important price level, which will determine the trend for the following week (at the very least). From here I see only three possible scenarios, starting with the most likely one to occur.
1) Price pulls back from the resistance level, as I presume a lot of people will be shorting the high level of 25th October. Alternatively, it can consolidate in this area until all the shorts are absorbed. Then, it pierces through that level and blasts up. If you are breakout trader/investor, that would obviously be the moment to buy. I probably would wait for some pullback, just in case we see scenario 3, discussed below.
2) Price bounces off that resistance, consolidates for a bit and then drops down, in which case I am looking to open a short position. Pretty straightforward.
3) Fake-out, although most unlikely out of the three, still quite possible. A sudden spike up will trigger the stop losses of the short players and will invite the breakout traders to open their longs. A quick drop afterwards would kick the latter's stop losses and eventually you are left with a much smaller amount of participants in the move.
This is one of those levels where you don't necessarily set a limit order, but wait and see how price reacts.
1) Price pulls back from the resistance level, as I presume a lot of people will be shorting the high level of 25th October. Alternatively, it can consolidate in this area until all the shorts are absorbed. Then, it pierces through that level and blasts up. If you are breakout trader/investor, that would obviously be the moment to buy. I probably would wait for some pullback, just in case we see scenario 3, discussed below.
2) Price bounces off that resistance, consolidates for a bit and then drops down, in which case I am looking to open a short position. Pretty straightforward.
3) Fake-out, although most unlikely out of the three, still quite possible. A sudden spike up will trigger the stop losses of the short players and will invite the breakout traders to open their longs. A quick drop afterwards would kick the latter's stop losses and eventually you are left with a much smaller amount of participants in the move.
This is one of those levels where you don't necessarily set a limit order, but wait and see how price reacts.