CL1! In volatile times, both opportunities and risks increase. Traders gain the ability to be more selective, adapting to new market regimes by adjusting risk and trade management strategies. Key tools in this process include indicators such as the Average True Range and Close-to-Close volatility sigma bands. April 20, 2020: A historic day, WTI Crude Oil prices traded negative for the first time, and we have yet another volatile April.
"If you fail to plan, you are planning to fail." Preparation is essential before taking on the market head-on.
Many participants choose to stay on the sidelines when volatility exceeds 1 standard deviation. Others, however, see this as an opportunity—adapting their risk per trade, adjusting targets, and refining trade management. Reducing position size can be an effective way to manage periods of heightened volatility.
This Week's Trade Idea: Crude Oil
We'll be reviewing Crude Oil price action with updated levels, fresh insights, and framing a trade plan with an example idea for reference.
Key Levels:
• April Monthly Open: 70.75
• 2025 mCVPOC: 71.13
• Yearly Open: 69.64
• 2024 Mid: 69.52
• 2025 Developing Mid: 66.52
• 2025 mCVAL: 65.08
• March 2025 Low: 64.37
• 2022 CVAL: 61.60
• 2024 Low: 59.91
The recent announcement of reciprocal tariffs, coupled with OPEC+ production plans (though scheduled earlier), and the rising uncertainty around a possible recession, have collectively weighed on demand expectations—resulting in a significant decline in oil prices. Although the 2024 low was reclaimed and prices have remained above this level, the sustainability of this recovery remains uncertain.
Scenario 1: Push Higher Towards 2025 Mid
In this scenario, we anticipate prices closing above March lows. Price then pushes higher toward the 2025 developing mid-range, re-entering the 2025 micro composite value area (mCVA).
Example Trade Idea:
• Timeframe: Hourly
• Setup: Wait for a candle close above March lows. Look for a pullback reaction off the 2025 Value Area Low (VAL).
• Entry: 64.50
• Stop: 64.00
• Target: 66.50
• Risk: 50 ticks
• Reward: 200 ticks
• Risk/Reward Ratio: 4R
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Scenario 2: Range-Bound Price Action
In this scenario, the March low acts as strong resistance, aligning with the 2025 mCVAL. Price reverts lower towards the 2022 CVAL.
Example Trade Idea:
• Setup: Watch for signs of buyer exhaustion near March lows. If sellers regain control, look for a move back down toward 2022 CVAL.
• Timeframe: Hourly
• Entry: 64.00
• Stop: 64.40
• Target: 62.00
• Risk: 40 ticks
• Reward: 200 ticks
• Risk/Reward Ratio: 5R
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Important Notes:
These are example trade ideas provided for educational purposes and are not intended as trade recommendations. Traders should perform their own analysis and thorough preparation before entering any positions.
Please be aware that stop losses are not guaranteed to trigger at the specified levels, and actual losses may exceed predetermined stop levels.
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Glossary:
• VA: Value Area
• VPOC: Volume Point of Control
• VAL: Value Area Low
• C: Composite (used as a prefix: VA, VAL, VAH, VPOC, etc.)
• mC: micro Composite (used as a prefix: mCVA, mCVAL, etc.)
EdgeClear
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
P: 773.832.8320 | TF: 844-TRADE20
Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. The views expressed are opinions, not financial advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.