I tried to short oil today after the price had tested the range and then fallen back. I think this was a mistake — there had been a downside breakout from the recent trading range, but I don’t think breakouts on the daily chart are that believable — the market respects the levels, but not necessarily for very long. I was stopped out almost straight away. I was overconfident because when I have traded ranges so far I have done better waiting for the market to pull away from the range limit before going in. Today’s trade exposes the limits of such a strategy. Also, I fought the intraday trend, which I had resolved not to do.
I am wondering whether I should trade ranges at all, or stick to breakouts. I have signed up for some software that will allow me to back-test for answers to this kind of question.
Charts, from IG Index, show approx. entry and stop levels.