The price of the gooey, black stuff had been crushed – falling from over $80 per barrel to $68 in just two weeks.<\/p>\n
The “experts” were bearish. They pointed to bloated inventories and fears of a global recession. And, they told us the price of oil was headed lower.<\/p>\n
But my favorite oil trading indicator was flashing a “buy” signal.<\/p>\n
So, we ignored the experts and suggested oil would be trading higher over the next few weeks.<\/p>\n
Less than one month later, oil was back to $81 per barrel. Traders who acted on our buy signal were up nearly 20%. And, we recommended<\/a> locking in those gains.<\/p>\n Now here we are, less than one month later. The price of oil is back down near $70.<\/p>\n The experts are bearish again, suggesting that bloated inventories and fears of a global recession are going to pressure the price lower.<\/p>\n But, once again, our trusty indicator is nearing a buy signal.<\/p>\n Take a look at this chart of the CBOE Crude Oil Volatility Index (OVX) along with its Bollinger Bands…<\/p>\n <\/p>\n Similar to the stock market’s Volatility Index (VIX), the OVX provides buy and sell signals whenever the price of oil pops outside of its Bollinger Bands (solid blue lines).<\/p>\n Bollinger Bands measure the most probable trading range for a stock or an index. When a chart pokes outside of its Bollinger Bands, it indicates an extreme move – one that is likely to reverse.<\/p>\n On the OVX chart, we get buy signals when the index rallies above its upper Bollinger Band.<\/p>\n We’ve had five buy signals (blue arrows) over the past year.<\/p>\n Here’s how the price of oil behaved following those signals…<\/p>\n <\/p>\n The price of oil rallied immediately following all previous buy signals over the past year (blue arrows).<\/p>\n Sometimes the rallies were significant, lasting several weeks. Sometimes the rally ran out of fuel within just a few days.<\/p>\n But in every case, it was better to be a buyer of oil than it was to be a seller when the OVX generated a buy signal.<\/p>\n <\/p>\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<\/p><\/div>\n<\/div>\n <\/p>\n On Tuesday, the OVX closed just below its upper Bollinger Band. So, it hasn’t generated a buy signal yet.<\/p>\n But it’s close. We are nearing a buy signal for oil.<\/p>\n And based on the previous success of this indicator, once the buy signal occurs, traders should be looking for higher oil prices.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n <\/p>\n![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202305\/20230504-JMU-01_mow123.png\")
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