Why gold traders should be looking at USOIL
By Paul Reid
14 May 2024
XAU traders have been weathering some volatility over the last few months, with dips to lows of $2,340 (USD), rebounding to new all-time highs just weeks later. Well-timed orders in the right direction surely made a few XAU traders very happy this year, but if you’re not already holding open a gold order below the 2000s, you might be limited to day trading current volatility.
In contrast, USOIL has consistently been a trader’s dream, despite political and economic volatility rocking every market. With short-term and long-term reversals, both investors and day traders have plenty of options. But is oil trading easy, risky, or perhaps only for pro traders?
You might be surprised to find out that you don’t even need to know technical analysis to trade oil. Let’s find out why.
USOIL - the asset for all traders
USOIL is well suited to traders of all levels. In fact, you can navigate oil price actions without even using the most basic technical tools. Let’s eyeball the chart and see why traders of all strategies choose USOIL.
Price Rhythms
There are almost clockwork highs that quickly reverse to the lows and then back. If you open the USOIL chart on your browser, you’ll see the rhythms immediately. It’s a beautiful jagged landscape of highs and lows within a short price range.
The small and consistent price swings are around $4 to $6 from high to low, which occur daily whether rising or falling.
Then there are the medium shifts of around $9 to $16, also relevant to both rising and falling price actions. For traders looking to buy low, hold, and sell high, the medium swing happens, on average, once every 2 weeks.
There’s another rhythm that happens less frequently, and it’s usually epic. This is better suited to the long-term trader who simply wants to buy at a low and hold, or short at a high and wait. Over the last 5 years, USOIL has had a long overall rising trend several times, which suddenly and violently resets. These big resets can lower the price by as much as $50. Anyone daring to short oil during those cycles can make a killing, but trend traders following the slow rise get smashed.
The epic rhythms are almost impossible to forecast but present the biggest results. These are best forecasted using fundamental market news such as OPEC production cuts or supply & demand issues. Just remember that there is often a small and immediate reaction to the news followed by a massive reaction that follows after some weeks.
If you are hoping to catch one of the big price moves, you’ll probably need to buy and hold, possibly for several months. Check the chart now to see when the last epic shift happened. One might be brewing right now.
How to trade oil daily/weekly?
A strategy without good timing is like a car without keys. Let’s go over the strategy, but you’ll have to time your entry points well to get the full benefit of oil volatility.
Glance at the chart right now. Set the time frame at 4 hours (top left of the chart), and one icon to the right will switch from candlesticks to lines. Now you’ll see the beautiful peaks and valleys bouncing up and down. You’ll also see a few flat-top mountains, and from time to time, a massive price action. Let’s look to the right side of the chart and see what’s happening right now.
Is the current price heading down or up?
Downward moving price
Track back to the last peak and check the price. If the price behavior stays consistent, one of three price actions is likely in progress. The small price action, the middle price action, or the epic seasonal shift. One of them is getting started.
Track the price from the last peak and project where a small and medium swing would end. That could be two possible entry points to consider. When you see a valley forming at one of those projected points, you might be looking at the next reversal.
If it turns out to be a seasonal price action in progress, the depths of the fall are anyone’s guess, so if you happen to hit the buy order at the small or medium point, make sure you protect your funds with the Exness stop loss feature.
Upward price action
It’s rare to see a price spike or rapid rally for USOIL, but they do happen from time to time. If one does, then a well-placed buy order will end your day with a very nice surprise, but let’s focus on the more common price actions. Track back to the most recent valley and add the small or middle swing range. Those are the two possible reversal points to consider.
For example, if USOIL is on an upward trend and passing $82, a small price action points to $88, which would be the entry point to short or sell USOIL. If the range is a middle price action, it would continue rising to around $95 before reaching resistance.
Whether upward or downward, your goal is to simply watch the charts and wait for reversals to form at the small or medium price action point.
Conclusion
Whether you are simply trying to offset the rising prices at the fuel station or thinking of making USOIL your daily/weekly trading instrument, Exness has everything you need. From protective features that can cushion a crash to low trading costs that increase potential profitability during a rally.
As with all popular trading instruments, you’ll need to stay sharp, so be sure to install the Exness Trade app and get instant notifications of market changes. New influences on the rise, so we may see a break in these patterns.
Make sure your Exness account is active and funded so you can trade without delay, but be patient and wait until your confidence is high before trading. If you missed an opportunity, don’t chase yesterday’s… there’s always another one on the horizon, and with USOIL, you won’t need to wait long.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Author:
Paul Reid
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.