There have been 3 price rallies in the oil market in the last 10 Months. We are experiencing the latest one these days and it may end soon if a war doesn't break out between Russia and Ukraine. The previous 2 rallies ended up with %35 and %37 price gain respectively. The current price rally has reached to %40 gain already and it started to give signals. We may see a consolidation period first and then decline. There have been reasons for these declines and this time the reason may be global economic slowdown. This morning the Bank of China lowered the Bank Loan Rate 100 points. The reason for this is to encourage people to spend more. As the last Retail Sales data in China has shown us there is a showdown in the market especially in the real estate sector. Higher energy prices trigger inflation globally and people tend to spend less. Less spending means slowdown in the market and this is not a good sign for crude oil prices.
As you can see in the chart above each rise ends up with a sharp selloff. For beginners let us calculate possible earnings. 1 Lot means 1000 Barrels in the Forex Market. So every 1 USD rise and decline means 1000 USD profit. Let's say you have opened a sell position now and the price has fallen 10 USD that means you will earn 10.000 USD. This is a great profit for a short time. To open 1 Lot Sell or Buy from these prices you only need to have 425 USD in your account. This is the main reason people quit their job and do day trading.
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