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Royal Dutch Shell as a proxy for Oil

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Oil is a difficult market to trade given the players involved, it can be spiky and fast moving and therefore hard to predict and easy to get stopped out of unless you use very wide margins of error.  I like to use Shell as a proxy for Oil because although it is moved by Oil it behaves more like a company share, naturally enough.

 

On both Oil and Shell my analysis suggests we have not yet reached the bottom and the recent mainstream media suggestions that we have only reinforces my view on this (being a contrarian trader!).  Using the Shell A weekly chart (below) I have plotted the Elliot Waves to a completed Wave 3 of 5 down and now in a Wave 4 counter trend rally,  I believe we are at the turning point of the A-B-C rally (Wave A completed at just above the Fib 38% - blue Fib) and are now due a drop to the Fib 50%/62% (red Fib).  After that Oil should complete the A-B-C with a 1-5 up on the hourly chart and again I'll be looking for Blue Fib 50/62% to see the end of this rally before the final drop towards the all time lows or beyond?  To pin point these turns more accurately I will move to the Daily and hourly charts but the weekly maps out the medium term route for oil.  I am short Shell at 1680 and will swing trade to catch the next rally up before taking longer term shorts to the bottom.

 

Look forward to views, especially contrary ones!

 

Adrian



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Following on from my Brent Crude post I looked at Shell; I like to see if Shell can help me get a fix on Oil and vice versa.

 

After I went short at 1700ish the price jumped this morning and them dropped almost all the way back.  It may still it the Fib at 1780 after another leg up (just as with Brent) and if it does that has to be a great place to short.  I have a similar dilemma on Shell as I have on Oil, namely have we just seen (or are about to on the next leg up) a completed relief rally or just a Wave A first leg?

 

On the charts you can see the two alternatives (Red and black tram pairs & Red labels as alternative, which support the Black trams).  There is strong indicator support for a drop soon and I guess we cannot judge which scenario might unfold just yet.  The third scenario, that we have seen bottom and are on our way to $60 (Brent) I don't yet buy into.

 

Any thoughts on this?

 

Here are the charts:



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Mirror story to Brent Crude (see other post on Oil), with strong Daily chart resistance and a Triangle formation on the Hourly.  It looks like we could be in a wave 1 drop and retrace (maybe to the 62%) but if the price breaks the lower Triangle line we are on for a significant drop.

 

Here is the chart:



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Doesn't look like there is much interest out there in Shell (stand alone or as an Oil proxy) but I'll just complete the thread and then call it a day on this one.

 

Shell opened today with a break of my lower Triangle line (I had gone Short previously) driven I guess by falling Oil and FTSE100.  I am expecting a relief rally in Oil, and maybe in the FTSE100 as well so there is a decent chance Shell will retrace for a kiss on the Triangle before a bigger drop.  As with all the markets right now I can't tell whether a full retrace has completed or we have another leg up to go but that is often the way at this juncture.  the next few weeks ought to tell the tale.  I remain bearish and my medium term view is that Oil (and Shell) has another leg down to go to reach bottom before commodities begin the slow process of recovery.  That could take a good while (reaching the bottom I mean) so for now my outlook is Bearish for the majority of 2016.

 

Here is the hourly chart:



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Hi Mercury, actually I'm interested in this share as an Income hold and maybe trade aswell based on analysis / trends. i.e.

1.buy at the bottom to have and hold

2.take advantage of the support / resistance over time to make short term gains on peaks and troughs

Just joined today so would be very happy if you maintained your analysis :)

Thanks

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Hi Condor,

 

Welcome to the forum, did you do a welcome post to let everyone know what you are interested in and how you analyse the markets?  Useful to do.

 

I'll keep Shell and Brent Crude up and maybe we can exchange views as we go, always good to get other view points, especially contrary ones.

 

As I indicated in my posts, I think the bottom hasn't yet come but if you are already in for long term investment then that should be fine in the long term so long as you are happy to see it go red for a while.  You can top up as we go lower and if we have indeed already seen the bottom you are in good shape.

 

Cheers,

 

M

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Hi M, not taken my long term hold position yet ( thought I'd try to take advantage of a dip to do that ).  But seperately want to exploit any waves on my IG accounts, and develop my skill on tech analysis.  Thanks for keeping this thread going and I have replied on your US charting topic aswell. C.

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If you trade oil you absolutely must follow Punter@chigrl on twitter (admittedly I don't actually trade it myself) but she is the traders authority on oil.

She constantly tweets giving continual updates on,

per nation production levels and reserves,

national production costs,

national inventories and storage capacities, tanks full or having capacity,

rigs producing, rigs on standby,

political manoeuvering.

She regulary posts charts of her actual trades (she uses footprint price ladder rather than bar chart).

She is an ex prop trader now independent, was working out of Chicargo, still based in America.

 

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Thanks for the twitter tip off - am now following punter@chigrl , will track her for a while see if i can make any sense of her tweets

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what you say is understandable, punter@chigrl routinely posts her actual ongoing live trades, but like most very experienced traders she uses a Depth of Market (DOM) price ladder with a Price Footprint, these guys are not interested in 'indicators' or 'patterns'. This is nothing like a bar chart and therefore very difficult to relate to unless you have some education in the field. But, therfore, it must make you wonder about the real value of 'indicators' and 'patterns'?

 

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Caseynotes wrote:

what you say is understandable, punter@chigrl routinely posts her actual ongoing live trades, but like most very experienced traders she uses a Depth of Market (DOM) price ladder with a Price Footprint, these guys are not interested in 'indicators' or 'patterns'. This is nothing like a bar chart and therefore very difficult to relate to unless you have some education in the field. But, therfore, it must make you wonder about the real value of 'indicators' and 'patterns'?

 

  I have no knowledge of DOM or Footprint - at this point using more modest/simple techniques.  I had an interesting exchange with chigrl  on twitter (I'm forever20 on twitter) & Chrisoil chimed in - see below...

 

 

  • 6h6 hours ago
    Chris Oil liked a Tweet you were mentioned in
    6h:
    @chigrl @forever20 slightly out march/April peak time may/June is the weakest period for oil price. July/august is peak time driving season
    1. Chris Oil
  •  

    @chigrl @forever20 slightly out march/April peak time may/June is the weakest period for oil price. July/august is peak time driving season

     

     

    In any event I've formed my bearish view on Oil and Bought US Crude 3000 PUT June-16 in early trading this morning.

    So I've taken the position that Oil could fall as far as $30 by June expiry.  On the spread I bought at 23 first thing.  To buy same at time of writing it's 25 so already moving in my favour due to initial weakness US Crude Oil falling 39points.

    Time will tell of course, interesting weeks to come for sure.  Bloomberg TV talking about Oil right now...

     

     

 

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Kiss back on lower Triangle line achieved.  Good place to try a short with Oil showing bearish tendancy at present.  Am short at the kiss.

 

Here is the chart:



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Wow US Crude has really gone south today more than 3% this is shaping up nicely, must prey to the bear gods tonight for more of the same!  Bought some RDS this afternoon as a have and hold and intend to build my position as OIL/RDS fall further (hopefully).

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Classic Chartists 2nd kiss on the lower triangle line.  With Oil also making a possible Head & Shoulders Kiss it is shaping up for a resumption of the pull-back.  I guess we will see in the coming hours if this is right.

 



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Shell A opened down today with a significant gap drop.  With the twin bearish pressure of both the FTSE and Brent Crude this share looks set for a decent drop.  USDCAD has turned more bullish, supporting the bearishness in Oil.  A Head & Shoulders neckline formation has also materialised (dark blue line in chart below).  EW analysis suggests this is the beginning of a Wave 3 (though whether it is part of a Wc or something else remains to be seen).  Either way a sustained drop to at least the Daily Fib 38% is indicated and very likely as far as the 50% (1500 region).

 

Chart:



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RDS'B' has now fallen below my 1st position taken(have and hold portfolio) & I'll be looking to add on the green circle level. The US Crude / Brent is heading that way too which plays to the correlation / scenario that we're anticipating.

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what may not be covered  is  oil and it's relationship with  dollar/euro

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Shell A made a new lower low yesterday before rallying with the FTSE and Brent Crude but now it has rebounded off the Fib 50% from the 30 Mar high and is heading back down.  As indicated in a previous post I feel this one is heading down to the 1500ish area at a minimum and with Brent at a possible turning point and the FTSE100 as well I wonder of Shell is showing the way here?

 

I have more than enough positions out on Shell so I'm not adding at this juncture but any retrace from this downward move could be a decent opportunity for a trade and I am looking at Shell and BP and Rio Tinto etc to guide me for the FTSE. 

 

Chart:



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Market analysis is a constant process of updating as more price information comes in and Oil has been a classic example of this of late.  Especially difficult in a Wave3-4 with a lot of whipsaw action.  On Brent Crude I recently came up with a revised view on the W4 movement such that I now believe it hasn't yet finished but may do soon at a key congestion area (see separate post).  I like to find correlation with Shell and I think I may have it on Shell B (Shell A works too in terms of Fib level).  I have good Weekly and Daily tramlines and have added a congestion zone (red horizontal lines) on the daily chart.  All points to a likely turn of Wave 4 (A-B-C format) in the congestion zone and somewhere between the Weekly Fib 38% and Daily Fib 50% (off the Wave 2 high).

 

Charts:

 

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If we do have that ABC down on OIL (other thread) then my plan to pick up RDS'B' can be driven by the Oil Price Fall as the price chart action unfolds.  Should be cheapest at end of C wave down($31?). C

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