Light Crude Oil jumped to $130 a barrel at one point, the highest level for over a decade, while wholesale gas prices for next-day delivery more than doubled. However, if we look at the monthly timeframe, Light Crude Oil CL analysis below, you will see a strong monthly imbalance of around $130 has been reached.
A few weeks ago, this imbalance was mentioned in the Set and Forget trading academy. What has happened since the imbalance was reached? Crude Oil prices have dropped almost 20% since 15th of March 2022. Will oil prices start to drop with the help of this supply imbalance? That’s what we are expecting. It will help millions of companies and people worldwide, that’s for sure. Buying Light Crude Oil short-term right now is not a good idea. There is room to drop about 40%.
As supply and demand traders, we do not need to pay attention to the news or fundamental analysis. Once a big timeframe imbalance has gained control, earnings do just the opposite and react strongly to those imbalances. Why do you see positive earnings, the underlying stock drops like a rock or a negative earnings announcement, and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances in gaining control.
You should not worry about fundamentals unless you are doing very short-term trading and scalping. Not even the Ukrainian/Russian conflict that started in 2022.
Trading is just waiting for the right trigger points and scenarios to present themselves, this game has a name, and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for the price to pull back or dip into the price levels we want to trade. These price levels are made of supply and demand imbalances in our case. You can use these imbalances to plan your trades in lower timeframes.
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