If one trades commodities and loves the impact of international flair I would guess that person loves the Crude Oil market. Will OPEC hold true to reducing supply? What about Russia and Venezuela? Venezuela, what is up with that country? How about Crude production coming from India? Wow, and we have not even approached news out of Nigeria, Ecuador or the United States.
In my view when it comes to Crude Oil I want to read all that I can but given the fluid nature of this market I rely on the LAWG 647 Model (LAWG) to help sort it all out. As luck would have it LAWG is suggesting that the next several weeks could be very interesting. So let us look at what LAWG is telling us.
Please be advised that I will be presenting information using data pertinent to August Crude Oil.
According to LAWG August Crude oil is in a downtrend. It tells us that in order to reverse the bullish trend August Crude Oil must close at or above $49.13 on Friday, June 2. The market closed Friday last at $50.05 already above what will be needed on June 2, but as of this writing August Crude is presently trading at $48.16. Going into the end of the week we could see heightened activity around the $49.13 area making it a battle ground price. If so we should see the market trading both sides of $49.13 with each side battling to establish directional dominance. To me this is pretty interesting stuff but it does not stop there.
Should August Crude Oil fail to close at or above $49.13 on June 2, going forward the Friday trend turning values are $51.66 for June 9, $53.16 for June 16 and $54.18 for June 23. As you can see should August Crude fail to turn bullish this week it will become increasingly more difficult to reverse the present bearish trend over the next three weeks. Typically this is not a great situation for a market attempting to reverse trend. So what to do?
If one is just looking for short term day trades one may want to look to buy August Crude below the $49.13, or selling above the $49.13 in hopes that $49.13 does become a highly volatile battle ground price. For longer term traders which I prefer I am waiting for the close on Friday. Should it close below $49.13 I will be recommending an aggressive selling strategy as I am of the opinion that should a commodity get close to reversing the LAWG and fail the ensuing move can be very significant. If August Crude trades above $49.13 I will look to recommend buying.
The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.