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CL April crude oil


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seasonalitycrude
Here is a look at oil's session on Friday. Note this is the May contract.


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oilvwap03202011
I have switched to the May(K)contract as it is now trading 4x the volume of the J.

Numbers I am watching for are 10330 which is the full Kools Tools projection from the 10414-10382 move, and 10402 which is the initial projection from the 10355-10384 move. The full projection off of 10355 is 10431. There is also an unfilled projecton to 10417 from an earlier move off of a prior low of 10325.
On the "Here goes" thread it was mentioned how dangerous the CL is to trade and I couldn't agree more. With more risk comes potential for greater rewards but one has to stay alive by prudently and aggressively managing risk in order to live long enough to capture the reward.

Everything with the CL moves faster and farther than an instrument like the ES. The following is an example of what I mean from last week with the CLJ contract which was the front month then. This first chart shows a typical ascending wedge.

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ascending wedge clj1 3 17


Because the underlying trend of the market was up one could reasonably expect an up breakout. On top of that they "usual" ascending wedge continuation pattern is up and the following is what happened in the next eleven minutes after the above picture was taken:

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wedge breakout clj1 3 17


The extent of the berakout was way more than one would usually expect from an instrument like the ES or NQ as it moved 80 cents in 11 minutes. That is $800 per contract or the equivalent of 16 ES points. What compounded the situation was the breakout point was the round number of $101. When stop losses at $101 got hit for those who were short it got really nasty. Even shorts with stops at $101 likely got hurt more than they expected because the market is so thin and their stop market orders likely got very poor fills. Those with stop limit orders just above $101 likely did not get fills at all.

The point of this is to point out the volatility of the crude oil contract and the need to be well capitilized to trade it and to really protect one's capital.