Why I short oil at 71.5?

23 paź 2018

To begin with, this is just an education flashback about how to make a successful trade.
Last week, EIA announced that crude inventories increase 6.5 million bbl which is the fundamental of the oil price crush.
After the negative news, how to judge short or observation?
We can see that after the news released , the oil price crushed from 76to 72 very propmtly.
After the consolidation around 70-72, the price kept dropping till now 67.55.
We can see from the chart that the price fall after touching the red zone of ichimoku. The selling pressure in this area will push the price down very hard, which was proved in lots of fx trading. So when the price line fall out of the red zone , we can try shorting the oil, cuz the reward risk ratio is very high. Just 50bp stop lose. Normally, I start with 20% fund.
After losing the critical priceline 70, we can make sure that the bearish trend has formed, so we can add up the position to 50%. Then the price start to consolidate again,which formed a very classic bearish peanant. We add the short position at the top line of the peanant. Now we own like 60%-70% positions on oil. Would that be enough? nope
We turned into long term chart, and can easily found that there was a bullish trendline supporting the price. Either we take the profit when the price hit the line, or we add more positions on short.
Based on 4h time frame, we can see that stoch rsi is on forming a death cross when the price line touched the trend line. Now decision made, short more.
After the trendline was broken and we recieved like 200bp profit on this adding up, we can take some profit. Closing half of the postion and waiting, see if the price will be pull back over the trend line or not.If successfully pulled back over the trend line, we can close all the postions and take the profit. A low risk high return trading done.