Analyzing Our Crude Oil Trade Plan & Key Levels

CL1!

This is our first blog recapping the trade plan from the prior week. In this blog, traders can take a sneak peek into why we choose and plot the levels we do on our charts. However, these are simply our thoughts and ideas on the market—we do not know what will happen. You should carefully consider whether this approach aligns with your own trading strategy and risk tolerance before making any decisions.

Do you struggle with analysis paralysis in your trading? Don’t worry—we will help you develop a process that you can customize and apply to your own market approach.

Markets by nature have randomness and uncertainty built in. Markets move based on the collective psyche of the participants. These footprints left behind by the collective participants analyzed through volume profiling and multiple time frames is what provides us with our selected support and resistance zones.

To help you better understand our chart setup, here’s how we define key zones and indicators:

1. On our charts, we use color-coded zones to highlight key market levels:
   

• Green zones indicate bull support areas.
  
• Red zones represent bearish support areas.
  
• Blue zones act as neutral zones but serve as important inflection points.
  

1. The Line in the Sand (LIS) is a crucial reference point:
   

• A single LIS can be used to validate both long and short trade ideas.
  
• Alternatively, there may be separate LIS levels—one confirming long trades above it and another confirming short trades below it.
  

Some other terms that you will commonly find in our blogs are:

• VPOC (Volume Point of Control): The price level with the highest traded volume within a given volume profile.
  
• VAH (Value Area High): The upper boundary of the value area, typically representing the +1 standard deviation level in the volume distribution.
  
• VAL (Value Area Low): The lower boundary of the value area, typically representing the -1 standard deviation level in the volume distribution.
  
• Value Area: The range where approximately 70% of the total traded volume occurs, falling within one standard deviation of the distribution.
  

Important and significant levels on our charts are marked. You can see on the crude oil chart, that we consider mid ranges of defined year, quarter, month, week as significant areas of interest and reaction by market participants.

We also give importance to HVN (High Volume Nodes) and LVN (Low Volume Nodes) and how price usually reacts to these visible distributions of high and low volumes on the volume profile.

Our analysis begins with four key questions that guide our market perspective and decision-making process:

1. What has the market done?
   
2. What is it trying to do?
   
3. How good of a job is it doing?
   
4. What is more likely to happen from here?
   

These questions are not intended to decipher the reasons behind market movements or predict outcomes based on personal bias. Instead, they provide a structured framework using Auction Market Theory, Volume Profile, and market-generated significant levels to develop a trade plan—whether for the day or the week.

This trade plan does not dictate specific trades to take; rather, it serves as a roadmap, outlining the key areas where we may want to engage with the market.
To illustrate the importance of structured market analysis and preparation, let's review how our recent crude oil trade plans have played out:

Week of January 27, 2025 – Crude Oil Plan Recap:

• The initial trade plan played out, but a pullback occurred.
  
• Buyers stepped in, pushing prices back toward the Blue zone (also the LIS for longs and shorts).
  
• Long positions were only valid after confirming a reclaim of the January 2025 mid-range.
  
• Crude oil then moved sharply toward our key bull support zone before rebounding higher.
  
• This completed the trade plan scenario outlined in red.
  

Week of January 13, 2025 – Key Takeaways:

• We identified the start of bullish momentum in crude oil following a long Q4 2024 consolidation.
  
• Two short trade scenarios were outlined, with the first playing out as expected.
  
• Reviewing past trade plans helps traders develop a structured market preparation process.
  
• This analysis was featured in the Editor’s Pick, mapping out key levels and our thought process.
  

As we mentioned earlier, we do not have a crystal ball but we do have insights when planning for the week. If you are incorporating this weekly plan, please also monitor and be ready to adjust with new information that is provided on the hard right edge.

If you click the play button on most of our trade plans and just consider that week’s price movement, you may notice that our plans have thoughts and efforts put in them.