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Trading the Trend: long oil

WTI is seeing a minor retracement in a strong uptrend which can be used to enter a long oil trade with an upside target between $97 and $99 and a stop-loss at $85.70.

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(Video Transcript)

Tullow Oil shares drop with poor earnings

Good morning and welcome to Trading the Trend on Wednesday, 20 September 2023. A few weeks ago, we went long Tullow Oil and unfortunately what has happened since is that it's earnings disappointed and you can see here the share price dipped, actually more than dipped, it fell by 10% before stabilising.

But interestingly enough, it actually held at its May to September uptrend line. We are still long in our trade because we had our stop loss below the August low at 31.50p.

And as long as that doesn't get taken out, we remain bullish with regards to Tullow Oil because the trend is your friend and we still have a series of higher lows in place at the moment despite that huge drop we saw before.

So that's why we have stop losses in place, to protect potential moves against us. But at the same time, we want to let our profits run if we can, and perhaps we will come back into profit on this share in the days and weeks ahead. Who knows?

USD/JPY remains a positive trade

Moving on to last week's Trading the Trend: we jumped onto the bandwagon of this ascent we saw in the US dollar versus the Japanese yen. And you can see here we are still in positive territory on this and trade.

If you bought with us in that sort of area, maybe you can raise your take profit level to break even, that way, basically, if you were to get stopped out, you wouldn't lose any money. And you can either get out now with a small profit or you can let it run.

Maybe we're going to head towards the ¥149 area or so before the Bank of Japan might actually intervene around the ¥150 mark. So this trade is also still ongoing.

Fed not expected to hike rates

And today what I would like to do is do something similar here with regards to the oil price. I'm aware that the oil price has recently risen by about 16%, but we are short-term coming off here and consolidating ahead of today's Federal Open Market Committee (FOMC) meeting with the Fed, which is not expected to hike its rates.

Since the trend is very strong here, what I would do is buy on any minor retracements, such as the current one here, West Texas Intermediate (WTI), and perhaps do so with a stop loss below 8 September low at $85.70 and an upside target around the $98 mark, $99 mark.

Today's Trading the trend is to go long crude oil and to do so on WTI on a minor retracement lower and do so with a stop loss at $85.70 and an upside target of between $97 and $99.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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