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Crude Oil (WTI)

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Yeah that's my point, trend line is not valid because it broke back above to fresh highs.  The second one is not confirmed with sufficient touches and rejections (rallies in this case).

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@Mercury,

I do agree with quite a few of the things you post and understand your thinking and logic behind such things. However, I personally separate trading and investing. For me personally (I do not expect others to agree with me) investing is all about creating long term wealth. So for me personally I invest in many different high risk capital growth investment funds every month using 'cost pound averaging'. I only invest lump sums when there are major corrections, drops, recessions, etc. This has enabled me to achieve since inception for the past many years double digit annualised returns and they have never fallen below such figures to date. Now this is my investing and it is certainly not trading. 

For me trading is more frequent than investing. My investment portfolio above could be for many years such as anywhere from 20 years to 40 years. This is very different for me personally to trading. So therefore I disagree with you but respect that we all have different thoughts on such matters and that is absolutely fine. I am not suggesting I am right or you are wrong. I certainly do not use the same technical analysis for my investing as I do with my trading when making decisions on investing and trading. There are variances. 

There are some fundamental differences between trading and investing. So when I am personally investing in investment funds I can take advantage of 'compounding' to enhance my profits and reinvest any dividends back into the funds. My timescale for my investment fund portfolio is decades whereas my timescales are no where near that in trading. 

Another fundamental difference in my investing style to my trading style is that when the trend reverses when I am trading my stop loss will close me out. When investing I will merely ride out any trend reversal and if the decline is big enough even add to my positions. I agree that investing is more to do with 'buy and hold' but my trading style is anything but that. 

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Agree with everything you said there @TrendFollower.  The only thing I would suggest you consider is that over the past, well since Bretton Woods really, we have been in a monumental bull market driven by debt related money creation as a result of disconnecting the USD from the gold standard.  Governments could now create money from nothing to fund their policies and private enterprise could fund projects with debt "to infinity, and beyond!"  So the investing strategy you outlined made perfect sense and has become the defacto way to do things in the professional finance community because that is all that they know.  But what would happen to that strategy if a long term bear market (or depression phase) takes hold.  The mantra of buy low and sell high is well known but so many people never sell high on the premise that they are holding for the long term.  That is my main issue with investing these days.  If ever there was a time to sell high it is now, surely?

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@Mercury, I take you point. If there was a long term bear market of say one year, three years or even five years then I would merely be adding to my positions 'drip feeding money' so that when there was a bull market I would get some price amplification due to buying low. Due to my age and timeframe I am not a seller. I am merely accumulating as many units as I can in the funds and the lower the price the better. I have never sold any funds only switched when I felt there were better performing funds which produce more returns from my capital. So I actually welcome a long term bear market when it comes to my investment fund portfolio. 

A long term bear market would not last forever just like a long term bull market would not. Now if someone was close to retirement and their time frame was five years or less then I take your point. If that long term bear market lasted say ten years then my strategy would not be effective for a person in that scenario. I would agree with you in this specific example I have given. This is not my scenario. 

When I am around ten years to retirement, I intend to switch from high risk capital growth funds to more defensive income funds and thus severely reduce the risk in my portfolio. I currently monthly invest in emerging market funds, frontier market funds, small cap funds, micro cap funds, etc.  These are all high risk capital growth funds. 

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Not much action overnight but slightly up. Market seems unsure of direction. 

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From the 'daily' chart it seems either it will commence its next leg up or there is an extended correction coming. This is where I am with @Mercury that it is very difficult to place a trade on Oil at the moment either long or short. 

The best strategy would be to wait until a clear trend direction emerges but until then just monitor the price action and set alerts for when certain price parameters are met.

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Still waiting for a break of my upper Tram-line for any long (watch out for a fake one Oil can be  bit spiky).  Odds are still on for further drops until stronger support reached.

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Goldman still thinking 85 by EOY tho. 

Lets ignore the fact they’re scumbags with exposure in the market they’re commenting on for a moment tho... ?

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That's WTI right @PandaFace cos we've already had 85 on Brent...  I love they way these guys talk about where the year will end up, like somehow the markets operate to the Gregorian calendar and reset every Jan 1...  Can't believe people lap this stuff up...

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@Mercury,

I fear that any move below $65.00 could possibly lead to $62.50 level. If this level were to be reached you could have further selling and short trades increasing leading to an amplified move downwards.

At this moment in time I just do not see the long trade. Also far too much risk is attached to this trade from a fundamental perspective. There is the potential of a global economic slowdown which if it materialises will affect negatively on crude prices. Sometimes doing nothing is the best move. Patience would be key as there may be a better opportunity coming in the months ahead to enter a long trade in crude with higher odds in your favour from A lower price position. 

What we do not know is if the Iran sanctions are going to hurt oil or not. However, there is the possibility of a rebound and a jump up above $70.00 which could easily happen. The positive is that no major technical levels have been broken and also one must not forget backwardation. 

Markets rarely move in a straight line, they tend to move higher or lower during short, medium, and long-term trends. So from a longer term perspective it is still relatively positive for WTI. 

For me the trade on WTI Crude right now is short and to hold that trade until there is a trend reversal to the upside. 

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On ‎23‎/‎10‎/‎2018 at 16:49, elle said:

Capture oil.PNG

 

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I have 2 possible turning points at previous Triangle breakout (7150) and at Wave 4 termination (7050).  I kinda favour the latter but who knows.  The move down looks like a 1-5, which is in the direction of the potential new trend.  This would mean any rally would be a relief retrace to a suitable Fib level after a breakout of the tram-lines.  PMD is building on the Daily too, support a turn back up.  There is always a chance of a new higher high for the whole move up to coincide with the Monthly Fib 50% and the upper weekly tram-line but we would have to reassess when we see rally price action.

For now my assessment is a continuation of this bearish move to somewhere between 7,000-7,200 before a rally that breaks the 1 hour chart channel tram-lines.

Brent-Daily_311018.thumb.png.e49c03917803c52c25a029af477388fc.png

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13 hours ago, elle said:

Capture crude.PNG

whilst true .... are we not at a position now where we can redraw the support (as below with the orange line)

2040200132_Oil-USCrude_20181101_08_23.thumb.png.ddc902db0337f45f76fc5f644c002473.png

 

playing devils advocate here.

Edited by cryptotrader

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This raises an important point in charting @cryptotrader, which is that one can draw lines in many places at once.  In fact for me it is important to try several set ups to find the best one or identify alternative scenarios.  For both analytical conclusions and especially for actual trading off the chart set ups I find I need much more that just lines or geometric patterns.  I use a variety of other techniques and try to stick to set rules for what needs to be in place before actually trading.  I believe @elle uses at least diagonal lines/channels and levels, maybe other stuff not shown, and where you get an intersection of a strong level and a channel tram-line that is typically an important zone of support/resistance for me.

However in this case I disagree with both channel scenarios, I don't see a Daily chart up-sloping channel I find credible on Brent right now.  I have a much wider channel on the Weekly chart, which I think is the key driver in play on oil.  On the Daily I have a down-sloping channel (red lines), which I am interesting in seeing how it interacts with key support zone...

Brent-Weekly_011118.thumb.png.e3d52cb8e8b6af01d8dbf6627134b88e.pngBrent-Daily_011118.thumb.png.7225ffd439f48ec302b3fdd815ac52e2.png

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update  - blue demand zone hit

Capture cl.PNG

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Did any of you short or are any of you short Crude Oil either WTI or Brent? 

I appreciate some of you love your charts and technical analysis is great at showing us how the price has been behaving. Using this information can help in decision making though there is absolutely no guarantee that any assumptions you may make will play out. 

Let me add some basic current fundamental analysis to the mix here. 

  • Donald Trump will want lower oil prices before next weeks US midterm elections
  • It is reported that there is record production of US Crude

I do actually think Crude will rally at some point in the future but at least for the next week or two I cannot see that big rally some are expecting. From the charts the only trade that makes sense is short yet no one seems to even be discussing it.

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Yes, the Saudis got the message loud and clear and are pumping for dear life.

Just as a side note on the oil alternative and thinking electric cars a short while ago and was looking at component materials, lithium, copper, and probably in the future uranium (for nuclear power plants).

Interesting Lithium chart;

image.thumb.png.96e8d8139ba26a058f48c8af32de9e78.png

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On the contrary @TrendFollower, my chart set ups are showing that the medium to long term outlook is for a Bear market.  As you have said yourself, markets do not move in straight lines and I agree so I am expecting a rally soon to set up the Bear.  I am simply unsure as to whether this will be a partial retrace of the current move down or a full leg up to a fresh high.  I would need to see this rally before contemplating a Short.  Additionally, in response to the original question on the thread, I suggested at the time things were unclear to me and therefore no trade presented itself.  However if we see a turn at support and a break of the upper channel then a Long is viable but only short term.

In terms of the macro picture I also present 2 LT scenarios:

  1. Oil drops to all time lows as its importance dwindles
  2. Oil sky rockets a "peak oil" becomes a reality

I think the Oil market is a lot more complex that a simple supply and demand equation and I do not think the American President has the power or influence to do much about it.  Anyway for me, as a technical analyst, I don't much care either way, I let the price action do the talking.

 

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@Mercury, I agree with your last sentence as I too let the price action determine whether I enter a trade or not and when I exit. 

Below are some articles that will offer a different perspective on whether the US President had the power or influence within the oil market. I agree with you and don't think Trump can actually control the oil market but the views below are interesting.

Why President Trump Is The Biggest Player In World Oil Markets Today

https://www.forbes.com/sites/daneberhart/2018/07/10/why-president-trump-is-the-biggest-player-in-world-oil-markets-today/

The American president is stirring up trouble in a volatile oil market

https://www.economist.com/finance-and-economics/2018/07/05/the-american-president-is-stirring-up-trouble-in-a-volatile-oil-market

You state that no trade presents itself. The question I am presenting to you is that does the short trade not present itself? If not then why not? The current price action is downwards. It is trading below its moving averages which is usually a good starting point. Your medium to long term chart set ups is for a bear market so again a short term trade based on a longer term outlook. There are several factors which lead to a short trade.

@Caseynotes, mentions something very interesting. Electric cars. These are gaining traction. I am invested in a start up called Pod Point which creates 'electric charging points'. This will have an impact on demand around the world for oil. 

I am not suggesting that the Oil price will crash to $50.00 though it may. I am merely asking why one would not short Oil right now. 

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Gain traction @TrendFollower (pun intended?) ?

Re the articles, the press will always find ways to write an interesting story but frankly if there really had superior insights they would be Warren Buffett and not some relatively unknown journo.  WB doesn't make pronouncements like that he just quietly gets on with his business.  Now if he did start publishing I would listen nut I don't listen to the MSM, except maybe to identify euphoria before a reversal... (classic contrarian in me).  Also, as we both agree, I let the price action be my guide and I don't really need to know why something moved in the past day, hour, minute.  It's just not relevant to me and TMI kills analysts as they chase shadows and wonder why the market went up and not down on poor NFP (or whatever) rather than working out what the price action means for their overall assessment.

OK so much for all that, now on to the more pertinent question, to Short or not to Short.  Actually it is a great topic as it is likely to through up a different in our methods, which is always worth exploring.  I love to hear about how others decide on a trade entry, risk management, stop placement etc (you and I have engaged a little on this in our posts before).

So let me ask you to lay out for me how you would trade a Short on Oil as follows:

  1. logic for the Short (i.e. direction), mostly you have done that already but a few quick summary points please?
  2. Where to enter
  3. Where to place stops
  4. Likely exit point and total pointage target and how long you feel it may take to achieve this

With this I can then tell you how I see it.  Probably we will be aligned on direction but differ on trading method.  This will be an interesting exercise perhaps.

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Actually Warren Buffett does make pronouncements and I'm pretty sure the many who maybe somewhat over reliant on TA won't  actually want to see them.

For the very brave here's a sample below;

image.png.74bb7e1875ae9f4b0324062fec828b3a.png

 

 

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Fully agree with that @Caseynotes, I have no interest in professional analysts utterances, as I think I posted recently the notion of projecting where the market would "end the year" is fallacious and I also said something similar to the above as to why they do it.  WB & Co don't do it right?  At most they tell their clients what their strategy is but they don't write articles about what the market is going to do and why it is doing what it is doing is my point.  When journos write articles they are doing exactly what WB an CM are talking about and rejecting, is also my point.

But hey it is just an opinion, nice that someone like WB shares it though. 

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Quite right @Mercury, researched journalistic type projections and technical analysis projections can never be more than a best guess and many realise too late that they are a double edged sword and if relied upon too much can destroy an account at lighting speed.

The more important point is that neither are actual trading, just adjuncts to trading that may or may not be of a benefit each and any time they are applied. The ability to execute will always outweigh the uncertainty of trying to predict and so that is what people should be spending their time learning. 

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Ah yes but that's the trick isn't? @Caseynotes  The ability to execute on a probability that is better than 50/50 or worse (gambling).  We all use some form of technical analysis to try to figure out good entries and good stop placement right?  Even if it is just trading between levels.  Otherwise we are trading on a "feeling".  I am interested to hear @TrendFollowertrading assessment of his Short idea to see how he does it, always keen to see other approaches.

We also all use some form of Fundamentals too right?  The difference comes in how.  Day traders, I assume, hang on every data release to watch short term resultant moves.  Long term traders ignore this in the main (except for big ones that coincide with major turning points) and look at the bigger picture Fundamentals.  Which is right, which is wrong?  Both and neither perhaps, I'm really not smart enough to really know what moves the market.  As I have always said, you need to know what type of trader you are talking to and how they trade to get what they might be saying.  And does it matter what moves the market so long as we recognise it and capitalise?

I think the bias point is the most important one here perhaps.  We all have them.  What I try to do to offset that is come up with several scenarios and set out likely road maps based on historic price action, which may often be in opposition to each other, especially at major support/resistance points.  But I only actually trade when the price action follows one path and then use key breakout points to trigger a trade.  Stops will then be places fairly close below/above the breakout points (using a sensible prior low if possible and a maximum allowable loss equation rule). 

As a longer term trader my intention is to hit a sizable gain (fewer bigger better) and scratch anything that reverses against my road map fast to only lose small (or not at all if I can move to break-even).  A wise man once said, "If I had cut my losses faster over my entire career I would be much richer now".  He was a long term trader too.  In my experience my biggest losses were as a result of not scratching a reversal fast enough but holding on, convinced by my own analysis.  I don't do that anymore and am much better off for it.

Ultimately I believe we are saying the same thing.  Let the market price action be your guide, we only different on time frame and method but it would be boring and dangerous if we were all doing the same thing right?  Too much like herd beast and we know what happens to sheep and goats, they get annihilated by the bulls and bears...

Happy NFP day!

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Latest production figures, at highest levels for 2 years. Saudi and UAE really out doing themselves. 

image.thumb.png.22ed61eb4c1804d3e581b150122e9a67.png

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No, it's no 'trick' @Mercury, the ability to execute is a skill to be learnt. Most overlook this basic fact because they are too busy fussing over indicators and re-drawing lines on charts. Trying to predict the future with projections is 50/50 gambling.

The skill needed is how to execute trades, you improve a skill by practice so practicing trading is the route to take and far more important than spending time producing endless elaborate possibilities on charts. 

Most people's time would be far better spent actually learning how to trade by practicing on a simulator.

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Yeah but what them do you mean by learning to trade?  I'm not clear on what you are saying, except you seem to be disassociating analysis from trading whereas analysis is a critical part of my trading.

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