Crude (NYMEX:CLX14) is showing one my favorite and what has been for me, one of my most reliable technical indicators.
The chart below shows my favorite technical indicators: the 9-day imple moving average (SMA, red line), the 20-day SMA (green line) and the 50-day SMA (blue line). I have also added the Bollinger Bands (BB's, yellow lines) and Candlesticks (red and green bars), each bar represents one day of trading on these daily charts. I have also placed bright white arrow lines that form one of my favorite technical indicators of all time, the SYMETRICAL TRIANGLE.
Daily January crude oil chart
Whichever way the market breaks out of the white arrow lines that form the SYMETRICAL TRIANGLE could be the way the trend goes for a long period. It has been said and I find this to be true in more instances than not we go out the way we came in. In this case that would be down.
I figured this out by placing my favorite indicators on the charts and studying them which I found here, which is a web application that we have developed for our clients called MARKETHEAD where I get about 85% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 15 years. So if I'm using it then maybe my readers should check it out. Yes?
Since I see crude prices moving lower from here a play could be to buy put options or bear put spreads with a call for a hedge in a 3 to 1 ratio just in case the trend changes dramatically to the upside. Another play could be to sell deep out of the money calls collecting premium. Remember selling naked options involves unlimited risk and should only be considered if you have a well-funded account.
For 25 option strategies click here.