The set-up: This is a purely technical trade, based on a coiling pattern. What’s nice is this “crude oil coil” is that we don’t guess at the direction that crude is about to go, we simply react to where it closes.

A close above the coil is bullish, while a close below it is bearish. No matter which direction it goes, we will have a three- or four-point target. And our risk is the opposite trend line, meaning if we get a bullish move, then your risk is the bearish line, and visa versa.

The chart:

With a coil, it’s like a pressurized spring and eventually it busts loose. If it closes above 52.5, expect a bullish move; if the close is below 50.75, oil is going down.

Read a prior call from Jason Bond on light sweet crude

How to play it: I’m agnostic as to which fund you pick – there are plenty of funds tracking crude, and I’ll leave it for you to decide which ones track it most closely – but I’d favor going long or short a standard ETF like United States Oil (USO); I’d avoid using leveraged funds because this is a swing trade based on technical analysis, and leveraged ETFs have more tracking error the longer you hold them.


Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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