The Crude Oil Extraordinary Engulfing Day Jan 4
Wed, Jan 4, 12:41 PM ET, by Corey Rosenbloom
Bullish or Bearish Engulfing Candles are rare in general, but it’s even more exceptional to see a single session “engulf” or completely overtake the total price action of the prior TEN trading session.
That’s what happened yesterday in Crude Oil and we’re seeing a big push higher off the prior support low.
What’s an Engulfing Day (candle) and what’s the plan for Crude Oil today? Let’s discover!
By definition, a Bearish Engulfing Day (or Candle/Bar) occurs when today’s high is greater than yesterday’s price high AND today’s low is greater than yesterday’s price low.
In other words, today’s price action exceeds both the high and low of the prior trading session.
Generally speaking, this is a rare or uncommon event and it indicates price instability or volatility.
Look at January 3rd’s price action in Crude Oil where the high was $55.00 and the low was $52.00, a $3.00 or 5.5% intraday range.
That’s extraordinary! It’s certainly worthy of further study.
Crude Oil was poised for a retracement swing lower, and with the exception of the bullish opening gap, that’s exactly what occurred.
Here’s the Daily Chart for better perspective and planning:
Crude Oil developed a wide trading range or rectangle pattern between $45.00 and $54.00 at the end of 2016.
We were seeing bearish reversal candles (dojis) at the upper Bollinger Band AND the $54.00 trendline.
We had a bearish plan (short-term retracement expectation) in our Weekly Intermarket Membership plan and – though price surprised us with a last-gasp stab higher – our bearish retracement plan (moving down away from the upper Bollinger Band toward the rising 20 day EMA) was correct… in a single session.
Note that price also broke lower and collapsed – as was logical – down from a Triangle Price Pattern.
As fascinating as it is, what’s the current plan in Crude Oil?
Our first target is achieved – it’s the rising 20 day EMA and the lower price pivot as seen on the Intraday Chart.
Use this as your bull/bear trading plan (trading the move “away from” the $52.50 level.
Note the bearish “return to $46.00″ pathway if beneath $51.00 and the potential “breakout” path above $54.50.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”
SDI Glossary: "Bearish" Definition
SDI Glossary: "Bullish" Definition
SDI Glossary: "price" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Stock" Definition
SDI Glossary: "Trend" Definition
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