Support and resistance level are considered to be most important factors while trading the oil price. Many successful day traders are successfully trading the oil, only with perfect support and resistance level. Professional traders buy the oil in the support zone with price action confirmation signal and sell at the resistance level.
Let’s see how the support and resistance level provides the oil traders excellent trading opportunity
Figure: Trading opportunity at important support and resistance level
In the above figure, the important support and resistance level of the oil price is marked by professional traders. When a support is breached it becomes resistance in the future. On the contrary, when a resistance is breached then in the near future the resistance become support for the price.
At “point A” the price retraces back to the support zone and forms a bullish pin bar which is strong price action signal. The price action confirmation signal formed near a key support zone trigger the buy entry for oil traders. Day Trader put their stop loss just below the wick of the confirmation candlestick pattern and set their take profit area in the next near key resistance level. In the eyes of trained professional support and resistance levels is the best suitable spot to trade the oil price with raw price data.
Trading with the support and resistance is extremely profitable however every single trader is advice to follow strict money management rules since false spike and the market gap is much common in oil price.