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Short WTI crude for TP at 46.50 with risk rewards 1:2

Short WTI crude for TP at 46.50 with risk rewards 1:2

Crude Oil WTI NYMEX:CL1!

WTI crude is attempting to beach resistance at 48.10 levels which has already tested this level as crucial point of demand and supply several times in the past (see blue colored circled areas).

It may drag up to 49.40 if it manages to break above decisively. For now, we are bearish on this commodity and advisable to sell on every rally.

The selling indications are bolstering as there seems to be a factor called volumes fading away. Hence, we reckon the previous rallies were only due to short coverings and certainly not to be regarded as bullish trend unless it breaks above resistance levels.

RSI is showing bullish convergence to the prices rises (currently RSI 14 trending at 62.1708 while articulating).

While slow stochastic approached overbought territory but there are no convincing hints of %D crossover (currently %D line at 85.8235 & %K line at 92.2907)

We spotted out the series bearish candles like dojis both on daily and monthly charts and spot price is still fallen below moving average curve on monthly charts.

Trade tips: Short near month CL1! futures

Light Sweet Crude Oil (WTI) futures and options are the world's most actively traded energy product. WTI plays an important role in managing risk in the energy sector worldwide because the contract has the most liquidity and most transparency.

So from current levels keeping speculation mindset we recommend shorting near month futures for target towards $46.50 levels again, however short term traders keep a strict stop loss at 48.50 levels. Thereby, we have attractive risk reward ratio.

If puts are overpriced relative to calls, the arbitrager would sell a naked put and offset it by buying a synthetic puts. Similarly, vice versa when you think calls are getting overpriced in relation to puts.

Arbitration can also be possible through box spreads where buying debit call spreads and debit put spreads for a risk-free returns.

The opportunity for arbitrage in options market exists once in blue moon for individual investors as price discrepancies often appear only for a few moments.

Alternatives: Since we could foresee 46.50 as a strong support if it fails to hold onto 48.10. It is likely to drop and advisable to short near month futures at spot levels for immediate targets at 46.50 with stop loss at 48.50, thereby risk reward would be 1:2.