How I Pulled out Over $800 Per Contract Going Long Crude

countertrend-fishUnless you’ve been hiding under a rock for the past few months, you’ve probably noticed gas prices have been dropping.

In fact, it’s been the worst selloff in oil since the crash in 2008!

You’ve got OPEC losing pricing power, the potential for a global slowdown, and downside momentum as commodity funds are getting blown up.

But I want to show you a specific trade where the setup was to the long side, which makes it a very contrarian trade.

The Daily Trend is Still Lower

Keep in mind that timeframe matters. Even though the trade was a long bet, it was on a shorter term chart.

Let’s have a look at the daily chart of Crude Oil first:

DailyChart

By every single indicator on our chart, the trend is clearly lower. The daily chart is showing no evidence that the trend has slowed or reversed.

How to Take the Countertrend Trade

However, I was confident enough in a countertrend trade based on a classic Ichimoku setup on a 15 minute chart:

CL15after

There were 3 things that made this a good setup:

  1. The tenkan-sen went flat. When this happens, it can often act as a magnet for price as the market will want to test those levels once more.
  2. Buying pressure seen in the lower wick. The new low down to 57.34 was hit very fast as the bid dropped out of the market, but price ran back up indicating that there were buyers ready at those levels.
  3. A tweezer bottom was formed. A tweezer bottom is when the close of the candle matches the open of the next candle, and the second candle goes green.

I called out these trades publicly, as well as detailed the setup to CloudChartist Premium members in the chat:

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After the bounce back to my target of 58.46, Crude proceeded to selloff even more. That shows you how important it is to take profits aggressively if you do put on a countertrend trade.

This trade resulted in a profit of $890 per contract.

While it seems that everyone now is an “expert” in what’s going on in the oil markets, we’ve been trading Crude futures for quite some time now and have a great feel on how it trades.

You can see a previous trade breakdown where I pulled over $1000 out of Crude futures in under 30 minutes.

Keep in mind, even if you don’t want to trade futures, you can still profit from the direction by trading USO stock or options.

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