The WTI Crude Oil markets exploded to the upside during the session on Friday, bouncing off of the low area of the consolidation that we've been stuck in for a while now. I still believe that we are in the "summer range", and as a result this move has not surprise me in the slightest. I also think that the $109 level will continue to be massive resistance, not to mention the fact that 110 above it is a large round psychologically significant number.
With all that in mind, this looks like a range bound market that you can play from the short term charts in order to profit between now and September when the large money traders come back into the markets. Remember, the Federal Reserve and its tapering policy is one of the most important questions out there right now and has a massive effect on the value of the US dollar. That in turn has a massive effect on the value of oil, which of course can jump around just simply based upon how many dollars it takes to buy that barrel.
Tight stop loss
With all that being the case, I'm still keeping a tight stop loss on all of my oil trades, and quite frankly think that the options market is probably the best way to play it. Nonetheless though, this market will continue to jump around until we get that clarity out of the Federal Reserve that everybody wants to see. Unfortunately though, that's probably not coming anytime soon based upon comments that have been made by several of the members of the board lately.
With that in mind, unless you have experience or at least a large account, trading this market is going to be very difficult in the next couple of weeks. The options of course work, so do the CFD markets if you happen to be in a country that allows it, simply because you can cut your size down so drastically that losses can be handled quite easily. Remember though, this is going to be a headline driven market for the next several weeks.