In what is assuredly to be a busy day in the markets, due in part to a Truce between the US and China with regards to further tariffs, I wanted to point out a significant level in Crude Oil. Headlines will read that oil climbs following Saudi-Russian accord, Alberta supply cuts, OPEC did this or OPEC did that. Let’s take a look at five years of price history in the Crude Oil Futures contract, using what I believe to be the most powerful indicator out there: Volume Profile or Volume by Price.
The bounce comes right at the 5 year volume point of control near $51. Coincidence? Likely not.
You know from reading this blog that the HVNs or High Volume Nodes are areas on the profile where price will react. If you are trading down into an HVN plan on finding support, if you are trading up with an HVN above, plan on resistance. Looking at the chart above where would a likely bounce stall should we get there?
That’s right, the next HVN which is around $57.
Volume by price works on any time frame, but the more time you take into account the more powerful the support/resistance levels. As a rule of thumb I scan through charts using 1 year of price history at the daily level, then back out to take a look longer term taking into account 5 years. In attempt to enter with precision, I use an intraday hourly chart.
I highly recommend using this if you aren’t already. It is great when paired with moving averages, Fibonacci Levels, etc. If you would like some further examples on how this works time and time again, email me.