US Oil (WTI Crude) Bullish Based on 1H and 4H Divergence with St

13 nov.

1. Market Analysis:

Asset: US Oil (WTI Crude)
Timeframes: 1-hour (1H) and 4-hour (4H)
Setup: Bullish divergence observed on both 1-hour and 4-hour timeframes
Support Level: Price is near a strong support zone, providing a solid base for a potential bounce.
2. Divergence Details:

Bullish Divergence: Both 1-hour and 4-hour charts are showing bullish divergence, indicating weakening bearish momentum as the price approaches strong support. This divergence can signal a potential reversal to the upside if confirmed by bullish price action.
3. Trade Setup:

Entry Point: Enter a long position when a bullish confirmation candle forms (such as a bullish engulfing or hammer candle) on the 1-hour chart after divergence confirmation. This candle should close above the support level for a stronger entry signal.

Stop-Loss: Place the stop-loss just below the strong support level to protect against further downside risk. This positioning ensures risk is limited in case the support does not hold.

Take-Profit: Aim for a 1:2 or higher risk-reward ratio, targeting the next resistance levels on the chart. Consider recent highs or Fibonacci retracement levels on the 4-hour timeframe as potential take-profit areas.

4. Risk Management:

Position Size: Determine position size based on risk tolerance, ensuring only a small percentage of capital is risked on this trade (e.g., 1-2%).

Risk-Reward Ratio: Aiming for at least a 1:2 risk-reward ratio provides an advantageous setup, enhancing potential reward relative to risk.

5. Additional Confirmation:

Volume Analysis: Look for an increase in volume on the 1-hour chart as the price bounces from support to confirm strong buying interest.

Support-Resistance Alignment: Ensure the support level aligns well with recent price structure and support zones on higher timeframes to reinforce the strength of this setup.

6. Trade Execution:

Place Orders: Set buy orders, stop-loss, and take-profit levels according to the criteria above.

Monitor the Trade: Manage the trade by adjusting the stop-loss to break even or trailing it if the price moves strongly in your favor.

7. Review and Adjust:

Post-Trade Analysis: After closing the trade, review the outcome to evaluate effectiveness and learn from the trade setup.