sions can have an impact. But price movements in crude oil may sometimes be based
Consider the chart of crude oil futures in
Figure 3. On May 4, 2017, crude oil dropped
to below $46 a barrel. If you go back to November 29, 2016, you’ll see a price of $44.82,
which was the low for that day, and a strong
support level for crude prices. After the
fact, you can see that crude’s price almost
reached that support before bouncing back.
When you see some-
thing drastic on a chart,
it may be a good time to
explore some fundamen-
tal research. Pull up your
favorite news source—
for example, you have
access to the CNBC
widget on thinkor-
swim—and look under
the energy section to see
what may have triggered
a particular day’s sell-
off. It could have been
caused by a slump in demand, uncertainty
about oil’s future, or an excess in supply.
More to the point, that activity happened
after OPEC’s decision to cut production
to control supply. Could it be that traders
weren’t convinced Russia was on the “
sup-ply-cutting” board? Or was it because U.S. oil
inventories were higher? Turns out, none of
the above. It could have been emotion triggered by forced selling.
Since then, oil prices have rebounded as
traders await the oil producers’ meeting in
late May 2017. The chart points to the next
resistance level at $54. Will prices break out,
or resume their trading range?
The scenarios presented here just scratch
the surface. There are countless countries
you can explore to determine how they
relate to and shape other markets. You may
even surprise yourself and find relationships you never thought existed. Start with
the fundamentals, then narrow down to the
Train your brain to think differently.
When you hear of a cyclone brewing in
the Pacific, or a change in leadership in a
European nation, think about how those
events might hit the global markets. Which
futures will be impacted, and how will those
futures affect other sectors? Last but not
least, figure out what new potential trading
opportunities may come knocking. All you
have to do is turn on your smartphone.
Jayanthi Gopalakrishnan is not a representative of TD Ameritrade, Inc. The material, views, and opinions expressed in this article are solely those of the author and may not be reflective of those held by TD Ameritrade, Inc.
International investment and investments in commodities are not suitable for all investors as they can be
extremely volatile and can be significantly affected by world events, import controls, worldwide competition,
government regulations, currency fluctuations, and economic conditions.
Stay in tune with
through your CNBC
widget. Fire up your
thinkorswim platform and you'll see
it right on the home
page that pops up,
or access it from
the left sidebar by
selecting Trader TV.
FIGURE 1: What’s with the selloff during planting season? Geopolitical events can throw you
a curveball, so pay attention to other parts of the world. Source: thinkors wim from TD Ameritrade. For illustrative purposes only. Past performance is no guarantee of future results.
FIGURE 2: How correlated are they? When you overlay two charts, the answer becomes
clearer. Copper and oil, for the most part, move together in this chart. Knowing this can help
you create possible trading strategies. Source: thinkorswim from TD Ameritrade. For illustrative purposes only. Past
performance is no guarantee of future results.
FIGURE 3: Keep an eye on resistance. A breakout above the resistance level could mean further upside in crude oil. And if prices slide lower, watch that support. Source: thinkorswim from
TD Ameritrade. For illustrative purposes only. Past performance is no guarantee of future results.