Oil Rekt; Don't Trade Against the TrendOil got, as they say, rekt yesterday. Our trend following system has spent most of 2020 warning of the downtrend. This chart is a good example of why an objective trend following system is more effective than a subjective knife catching approach.
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STRATEGY USED:
Momentum Mover
Trend Confirmation = Fractal Trend
Entry Signal = Breakaway Scalper
Exit Signal = Breakaway Scalper OR Orderblock Mapping
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DESCRIPTION:
1. Fractal Trend has been showing a downtrend (background color Maroon) for Crude Oil Futures (CL1!) since the start of 2020 for the most part.
2. We only take trades with this strategy when Fractal Trend (background color) AND Breakaway Scalper (bar color) agree on the direction.
3. For most of 2020 Fractal Trend has been showing a downtrend, and for most of 2020 Breakaway Scalper agreed on the direction by showing a Red bar color. Most of the short signals produced in this time were profitable.
4. Of course, the recent short signal that was confirmed on April 14th (we want to take the trade after the first candle closes confirming the trade) was the mother of all shorts as anyone shorting there shorted the historic crash to -$40 a barrel for Light and Sweet Crude futures.
5. While it is not realistic for most of us to have been short Crude Oil futures, and closing at the perfect bottom is perhaps even less realistic, this chart none-the-less stands as an example of why trend following systems work.
