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Fundamentals

During the Asian session on Tuesday (October 31), WTI crude oil fluctuated in a narrow range and is currently trading around 82.4 dollars per barrel. Yesterday, oil prices fluctuated at a low level in the Asia session, and there was still no big news in Europe and the American sessions, which mainly fluctuated around the stock information. Over the weekend,  a resolution of the United Nations on a humanitarian truce in the Israeli-Palestinian conflict was adopted, but Israel was still bent on delivering a devastating full strike on Gaza. However, perhaps the market has already given its own choice yesterday, that is, as long as the rest of the Middle East does not directly participate in the war, the Palestinian-Israeli war will hardly pose a real threat to oil prices. On the other hand, the market has also begun to trade an expectation that OPEC+ will still pause production cuts next year against the backdrop of a sluggish global economy and weak demand. This also allowed us to see oil prices fall to a low of 81.6 yesterday. However, the bears were still more restrained, trading around 81 before the outbreak of the war, without too much obsession to trade the war, and then rebounded to around 82.5. Yesterday, our recommendation was to chase long at 81.8 for the second stop loss time after the first one. Generally, there was a small profit. For many investors, losses are unacceptable, but on the contrary, stop-loss is the norm in trading! We have to learn to get used to it. Even if we could reject to stop loss and we may be able to carry it back in the end, how can we walk by the river without getting our shoes wet, and your capital will be reset to zero if we fail? The money in the market will never be earned, but your principal will be lost! Stop loss is not only a means of life-saving but also a kind of temporary bowing to the market to admit mistakes, as the gentleman will not stand by a dangerous wall.

Data for traders to focus on today include the US home price index for August, the Chicago PMI for October, and the consumer confidence index for October.  

Technical Analysis

Oil prices fell sharply yesterday, falling as low as 81.6, approaching the level of oil prices on the eve of the war, finally closed a full bear candle, and continued the incoherent trend of rising and falling day by day in the past few days. For investors who trade with a wide range of oscillating methods, this trend is very comfortable. For trading, my opinion is not to take both long and short positions greedily, but to obey a single trading logic modestly. For example, as the current logical thread is still the Middle East war, we should trade around this main line. We need to simplify the trading, as the more complex the strategy, the harder it is to insist and implement. Once the two-way trading method is broken, it will be easy for us to get overwhelmed and start to doubt our own judgment! Therefore, in the current context of endless war and surging oil prices, I will insist on going long at low. At the same time, I will also pay attention to points to pursue a better profit/loss ratio. For the market, the price around 81 is the area with more support and a local formation of a W-shaped bottom pattern this month, which is also a level where the war is close to no risk premium. If oil prices try to fall below the region effectively, a Palestinian-Israeli truce is still required, or a significant marginal weakening of supply and demand. Therefore, we remain to go long at lows and focus on opportunities to go long near support in the 81.5-82 area today.

It is recommended that investors mainly go long at low. If the oil price retraces largely to 81.6, you can go long with small positions. The stop loss is set at 81.1, the first target to take profit is 83.5, where you can reduce your positions and move the stop loss to break even, and the second is 85.5. If the oil price retraces again to 80.6, you can go long in the second position, where you could stop the loss for $0.5, and the target to take profits is the same as the first one.

Trading Recommendations

Trading Direction: Long

Entry Price: 81.600

Target Price: 84.500

Stop Loss: 81.100

Support: 81.500/80.600

Resistance: 83.500/85.500