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Has the Oil rally peaked?

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We are going to get Claim & Counter Claim until Sunday me thinks hence stepping out of the Oil madness until next week, C

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Or, there will be worries that the meeting will not produce the indicated result followed by rumours.  They say buy (or sell) the rumour and reverse the fact...  If Oil does turn down it could be worth a Short and stop protect at B/E against the fact.  This is what I am forecasting to happen but I feel we have a small leg up to go yet first...

 

Worth watching on the sidelines for the right set up.

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Just watching an Oil analyst on Bloomberg and the reason for the inventory drop last week was......... FOG in the channel where the ships enter the US - that amused the ***** out of me after all the the speculation.

 

He was also pointing to this weekend and stating that how will the Saudis and Russians restrict production when they are already pumping at maximum - i.e. it shouldnt have a huge effect. all very interesting, was long from each pullback on crude today - thank you very much .

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There was an article posted by reuters at 1730 about saudi arabia, are hesitating with the oil freeze.

Looking at the chart, similar to last night, it appears that the oil is settling for the moment and possibly we may cap, advances here. i did short last night with a hedge on this as oil is going to be quite volatile, therefore it is of the essence to be careful with sudden news announcements, Divergence of both RSI & MACD present, but caution as always. Quote from FT today:

"Indeed, there is no guarantee of a deal at the weekend. Saudi Arabia has said that it will not participate in a production freeze unless Iran agrees to join as well and Iran has steadfastly committed to increasing its output to pre-sanctions levels.

As it happens, we think some sort of compromise agreement is still likely, even without Iran’s full participation. But given that very few of the countries attending the meeting on Sunday have either the capacity or intention to increase output anyway, freezing production at the current very high level should at best put a floor under prices".

 

 

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After every opec meeting in the past the price has fallen after. Iran has said in the past that they wish to produce 4 million barrels a day before any production freeze

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As goes Oil so goes the stock markets, seems to be the order off the day at present so I guess some clarity on Oil would be great.

 

FWIW I think the top of this rally will be between 4500-4590 (Brent Crude), why?

 

On the Daily chart I have 3 near term scenarios:

  1. A-B-C about to complete the wave C then a final big drop begins
  2. 1-5 about to complete and then retrace into an A-B-C (that would be a larger scale A-B-C, about to complete Wa then back up to Wc before a final big drop).
  3. 1-3 about to complete W3 then retrace to W4 and on to complete the larger scale 1-5 up (i.e. we have seen bottom of Oil)

Those familiar with EW theory will notice that in all 4 scenarios a drop back is indicated.  It has been a strong rally so a retrace is due and the rally has been driven mostly by rumours of deals and a spurious oil stocks reading last week and I for one back the buy the rumour sell the fact maxim on this one - I can't see a deal of any consequence coming out of Sunday's meeting.

 

But where will it turn?  My view is it will turn before Monday/Sunday night and quite likely tomorrow.

 

Looking at the Hourly chart this final move up has been in a clear 1-5 motion (we are in the W5 now, in the final leg that is also showing a 1-5 internal pattern, albeit squashed as the sell pressure and doubt creeps in).  In addition, on both Daily and Hourly charts there is strong Negative Momentum Divergence plus Stochastic and RSI divergence and well into over bought territory.

 

There is a congestion zone between 4550 and 4590, made by the big turn last in Jan 2015 (4527) and a series of mini tops and bottoms there after during the recent large wave down (4586 ish) culminating in a little peak on 25 Nov 2015.

 

Finally I have a very nice set of down-sloping tramlines (brown) the parallel extensions of which cuts the up-sloping trams from the current move (grey) around 4530 tomorrow.

 

This could all be so much Blah Blah so I've put my money where my mouth is and gone Short at the last peek (black iii label), in case the market turns early, as it has a habit of doing, with stops above 4560.  Can always look again is the final W5 spikes to the 4580 area.

 

Would welcome thoughts, especially anyone who thinks differently!

 

Charts:

 



 

 

 

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Great analysis as always Mercury.

 

On WTI - I notice we have broken out downwards of the week running up channel within a channel scenario that proved highly profitable for me. The question is where do we go from here - I have some historical support at 4106 and then 3982 and the a 38.2 fib from Jiuy at 3948 - so a fair bit to bash through imho.

 

I tend to agree that Doha could well offer little in terms of serious outcomes - but that wont stop the market makers in the short run. If no agreement we will head south fast to 3800. 

 

As I write we are around the 4106 level and psychologial 4100  - so will sit and watch what happens for a couple of hours. I have a short ready if we break south and a long if we head north - I do love breakout strategies.

 

Will continue analysing charts in the meantime and post any thoughts.

 

 

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Where do we go from here indeed, that is the big question as always.  And also as always the answer is up or down LOL!

 

Seriously though, I'm in buy the rumour sell the fact mode of this Doha thing.  The rally has been build on the vapour of Doha and has been too strong without actual fact behind it.  At a minimum it is set for a decent retrace I feel, if not an actual resumption of the downtrend.  there is so much backlog supply out there that until things normalise more widely (not just in Oil markets) I don't see the case for the Bulls.  Therefore I remain a Bear on this but one needs to be careful, with Oil especially.

 

I have a Short near the recent turn, with tight stops against a final hourly chart leg up.  If that happens I will seek to Short again in the region of 4550 (Brent).  If that doesn't happen my Short wins.  Can't do much more so am going to leave it alone and await events.

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Today's trading strategy is ........... booking  a holiday, going to the gym, doing paperwork, sorting my daughters car insurance and then hitting the driving range for an hour etc. etc. - anything but getting involved in a  market which has everything factored in already ahead of sunday.

 

I have a long and a short built in - in case of a breakout but thats all.

 

Is anyone going to trade today ?  If so be safe whatever you do and have a great weekend.

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A wise move no doubt.  I have a Short at the recent high with a close stop.  If the market moves south from here I'll move the Stop to BE but will not add until we see what the reaction to Sunday is.  There is a risk of a spike with high volatility when the market opens so if there isn't sufficient head room to contain that I may pull the plug, there are better set up markets elsewhere, let's see what the day brings.

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You should send that to all the major news outlets and see if they will broadcast it!  Seriously!

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So Doha disappointed the bulls (Doh!) and Oil has turned just below the resistance points I had previously targeted, I'm happy because as I stated last week I had gone short in advance in case of just this eventuality.  The alternative strategy is to wait for the turn and search for an entry on the first retrace and that is where I believe we are coming up to now.

 

On my Hourly chart I have 2 valid tramline set up and 3 tram breaks with 3 possible kiss and turn point potentials.

 

As to the longer term, all 3 scenarios I had painted out remain valid, we will see as the next few days and weeks go by whether a sharpening of focus is possible.  For now I remain bearish, I see no chance of an Oil producer deal before the Summer so what would be the catalyst for the market to rally?

 



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No doubt, oil has played in a strange way today, but sticking to the charts, we await a see how we can play this out. Key fib level now approaching, now to await and see which direction will oil take.



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Oil back to Fridays close. 4175 thinking we might drop from here?

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It's all about the cash!  Russian and Saudi leaderships need cash to keep themselves in power, I mean can you imagine what would happen in Saudi if (or when...) new tech makes Oil redundant?  Despite these massive sovereign wealth funds (Norway is a good example) they are still heavily reliant on oil revenues, the sovereign funds are like final salary pension funds, heavily invested in the organisation that created them (in this case the Oil industry).  Fine when prices were $100 but not now.  That is why they are so pi$$ed off with Iran, who could care less cos they are already at war with Saudi.

 

Only option if price isn't working for you?  Volume!  Cue more Oil market share wars and another massive leg down for Oil.

 

Near term I can see another leg up to that 4700 ish (Brent) resistance level before a big drop.  Also a rally in USDCAD is emerging, that's no coincidence.  One to watch and prepare a strategy to enter?  You bet cos $20 oil does not look out of reach. 

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Well I have just had to turn my central heating back on its is so cold - so surely that will contribute to a more dove-ish outlook with demand going up ?  :smileyhappy:

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LOL!  Yeah me too, there was a snow shower earlier if you can believe that!  Here is an article that might cause some panic amongst the oil bulls, at least the longer term ones...

 

http://www.bbc.co.uk/news/world-middle-east-36131391

 

And while your are perusing that can anyone tell me what the fundamentals are when BP announces a loss and the share price jumps 4%?

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Brent Crude is approaching the next line of resistance.  This is the third time of asking for me on a turn of this rally, fortunately I didn't loose anything on the other two and in fact picked up some pointage once I realised it wasn't "the" turn.  "So one more into the breach dear friends..."

 

As previously posted I thought this latest move might culminate in another leg up to the 4700 area and so far so good.  I actually took a cheeky long coming out of the small Triangle that formed around the Wave 4 consolidation yesterday and exited last night because I wanted to concentrate on stalking the turn for a short (at least I have some profits to reinvest, I love to do that...  basically it is a free bet).

 

I am looking for a turn in or around the 4700 resistance mark (note a line of Daily resistance just above at 4734).  If this happens there are a number of possible scenarios still in play in the big picture but a decent drop is indicated on all of them.

 

Oil - Brent Crude Daily 270416.png

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Pretty strong move down after a touch on that resistance line with a clear small 1-5 up.  Neg Mom Div and Oil supply data just in.  I'd be tempted to call that a turn.  Normally I be looking for a small down and up with a lower high but Oil can move away quickly so I'm in with a Short just below the turn point.  Sometime you just gotta take a chance.

 



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I have stayed safe today - traded the ups, lost on the downs, bought near bottom and ended up ok - but who foresaw that last move up?

 

I didnt so bailed too early - hey ho.

 

Looking at the charts for inspiration and finding...................... none. If we go up from here there is huge potential as I see it, but feel the need for a retrace to gather momentum.

 

 

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Another leg up is always a possibility until the turn is confirmed but this is rather a short rally and I am looking at a top out near the Daily resistance (4735ish).  Got stopped out of my short at BE so no loss and live to try another day (probably tomorrow).

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I understand where you are on this - and Crude is very similar on my charts - there is some chop ahead but we may push through 4600 up to 4700 given the market seems to have its mind set right now - I have two longs running with reasonable stop levels to allow for flutter - and am looking on buying on decent pullbacks to support levels.

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Interesting  what is driving you to conclude it will carry on up?  If I had 2 longs just now I'd be inclined to deploy a dual bet approach and cash one, keeping the other for any upside potential but also look to consider a Short at the right moment (using force entry perhaps if you want to preserve your long). 

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Thats exactly what I did and then I cashed the other on the next run, Also just picked up a long again on the opening drop and have just cashed that - all in all a good day.

 

To me thi is not a market for takig long term views given the volatility and my trading style.

 

I think Crude has to go clear 46 level first, then I dont see any real tech resistance only historic - but my point above overides all at present.

 

Something else that is on my mind at present is the £/$ - right at a 38.2 fib from Jul last year - and given we are to a large extent mirroring we get a move down if there is a rejection.

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If you would like to set up a chat outside of here drop me a line at apkayoil@gmail.com and we can exchange details etc. Beats trading on your own all day .

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Oil looks to be still on its bull market scenario, however and i dont know if anybody else shares this opinion, but the technical analysis does suggest some caution with the current trend. Looking at the daily chart the 61.8 % level is approaching, 2nd tramline approaching, MACD and RSI appear to now be making higher lows. 

Charts below



 

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