FinancialMarkets Crude Oil Prices Ready to Pop Again - Expect $6 movement either direction
Crude Oil has been moving sideways since June (around 6 weeks now), progressively moving in a narrowing trading range.
To be honest I didn’t quite expect this, and I did have 2 Options straddle positions that expired worthless, since we didn’t get a large enough move in either direction.
However I think we have reached a ‘biting point’ again with Crude Oil.
It is clear that we have an Ascending Triangle formation, which should give us at least a $6 movement on crude oil in either direction once the break out happens.
Which way will the break out be?
It’s a difficult one actually, there are no robust fundamentals that support a break out in either direction (as yet!). But I imagine something is around the corner that will trigger the breakout.
My judgement tells me oil will remain within the $20-$40 trading range for some time until all the COVID-19 commotion has died out.
However, being a strong commodity and necessity, it is easily possible to see crude oil pop back into its original trading range of $40-$50 (pre COVID).
Given the uncertainty of the direction, I would go for an Option Straddle with strike prices very close to ATM.
Good luck!
Oil
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