{"id":19197,"date":"2021-12-02T07:30:18","date_gmt":"2021-12-02T12:30:18","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19197"},"modified":"2021-12-02T07:30:18","modified_gmt":"2021-12-02T12:30:18","slug":"my-favorite-oil-trading-indicator","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/my-favorite-oil-trading-indicator\/","title":{"rendered":"My Favorite Oil Trading Indicator"},"content":{"rendered":"

Forget about Organization of the Petroleum Exporting Countries (OPEC) deals. Forget about inventory reports. Forget about the economy “opening up” or “shutting down.”<\/p>\n

If you want to make money trading oil, then there’s only one thing to watch… volatility<\/a>.<\/p>\n

As we saw from its recent 15% slide in just three days, the price of oil is volatile. It often moves 3-4% in a day and can swing 20% or more in a month.<\/p>\n

That sort of volatility can lead to huge profits if you know how to trade oil the right way – or painful losses if you don’t.<\/p>\n

Today, I’m going to share with you my favorite indicator to use for trading oil…<\/p>\n

Take a look at this chart of the CBOE Crude Oil Volatility Index (OVX) along with its Bollinger Bands<\/a> (BB)…<\/p>\n

\"Chart\"<\/div>\n

Similar to the stock market’s Volatility Index<\/a> (VIX), the OVX provides buy and sell signals whenever the price of oil pops outside of its BB.<\/p>\n

Bollinger Bands measure the most probable trading range for a stock or an index. When a chart pokes outside of its BB, it indicates an extreme move – one that’s likely to reverse.<\/p>\n

On the OVX chart, we get buy signals when the index rallies sharply above its upper BB (four blue arrows).<\/p>\n

Sell signals happen when the OVX drops sharply below its lower BB.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Oddly, we haven’t had any sell signals this year. OVX did close below its lower BB three times, but none of those moves could be considered “sharply below.”<\/p>\n

Here’s a WTIC chart to show how the price of oil behaved following each buy signal…<\/p>\n

\"Chart\"<\/div>\n

The price of oil rallied immediately following all three previous buy signals this year.<\/p>\n

The March signal kicked off the start of a three-month rally where oil gained 30%. The July and October buy signals generated shorter-term rallies where oil gained about 12% in just a couple of weeks.<\/p>\n

On Tuesday, the OVX chart triggered its fourth buy signal of the year.<\/p>\n

I have no idea if this marks the start of a short-term or an intermediate-term rally phase for the price of oil.<\/p>\n

But based on the accuracy of this indicator, traders should be looking for higher oil prices over at least the next couple of weeks.<\/p>\n

Best regards and good trading,<\/p>\n

\"signature\"<\/p>\n

Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/h2>\n

Where do you think the oil sector is heading next based on Jeff\u2019s favorite indicator? Do you follow it as well?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

These next couple of weeks are important for oil…<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-19197","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19197"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19197\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19197"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19197"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19197"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19197"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}