Futures Trading Coach: This Is How Low Crude Oil May Fall

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Bearish technicals and fundamentals could spell more downside for oil. That’s the view from John Hoagland at TopstepTrader.

Crude-oil futures (@CL) may extend their recent slide to about $45.50, according to his analysis of recent price action. It closed around $51 yesterday, and is down from a range around $63 before sellers got active in late May.

“We were looking at a bearish flag, and now it’s breaking down,” Hoagland said on yesterday morning’s Market Forecast video. He alerted $52.30 as a key level, which proved prescient about two hours later.

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@CL briefly spiked $0.10 over that level after the Energy Department reported weekly inventories. It flirted with $52.30 over the next 20 minutes before proceeding to drop more than $1 into the close. Traders shorting a single contract at Hoagland’s level would have made more than $1,000 from the move.

“If you were there, if you were looking at that, if you took that short, you really didn’t take a lot of heat,” he said in the afternoon.

Crude oil futures (@CL), 30-minute chart, highlighting $52.30 level.
Crude oil futures (@CL), 30-minute chart, highlighting $52.30 level.

Hoagland, Senior Performance Coach at TopstepTrader, reviews key futures contracts and events every day on YouTube. His company evaluates traders based on objective criteria, looking to fund successful candidates with the company’s capital.

Oil, Oil and More Oil

A combination of rising supplies and weaker demand are weighing on crude. U.S. shale fields continue to flood markets with oil, prompting the government to lower its price estimate by almost 6 percent yesterday. Inventories have also been higher than projected for nine of the last 11 weeks.

OPEC and Russia have been hapless to brake the selling with production cuts. Still, any unknown changes to the political stability of the oil producing regions of the Middle East can change the picture dramatically. An example of that occurred overnight when two tankers were attacked in the Gulf of Oman.

Hoagland reminded traders that crude-oil futures will roll from July contracts (CLN19) to August (CLQ19). He expects most of the activity to change on Tuesday. That process, which occurs every month in oil, could slow its directional move.

He also saw short-term bullish momentum in S&P 500 e-mini futures (@ES) and the euro (@EC). In both cases, Hoagland said traders should watch upcoming economic reports like jobless claims this morning and retail sales tomorrow as potential catalysts.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.