Crude Oil (WTI)

[Mercury]

In terms of the long term direction assessment then, it looks to me from the Weekly chart that the rally channel has topped out (not 100% sure of course but the likelihood seems strong).  The 1 Oct price action hit the upper LT channel line and bounced back off it in a pin bar set and then proceed down into a strong bearish move.  This was just shy of the Monthly Fib 50% off the all time highs and into a decent area of very long term resistance.  The move up within the Channel (that should appeal to you @TrendFollower ) since Jan 2016 and fits the EW A-B-C form for a retrace rather than a motive wave.  The is NMD at the 1 Oct turn down but Stochastic is heading into oversold now, which is consistent with a pause or relief rally scenario as described in the previous post.

On the Daily chart you can see the Channel down more clearly with good touches on the upper line.  There is building PMD on the price action now.  This wave is so far consistent with a 1-5 motive wave.  IF we see a retrace and turn after a channel break out and that retrace is in an A-B-C form this will confirm for me a trend change.  Then a further fast drop through the support zone will get the Bear move going.  Could be a lot of good points on offer, however Oil is a difficult market in my view, there may be better places to put risk on (e.g. Stock drop could be the biggest in living memory...)

 

So in summary then and for discussion:

1. I see not major upside potential in Oil a present, but would love to hear from people who do
2. I see 2 possible road map scenarios (other than the Bear just keeps going longer - break of support would show that) and favour the retrace rather than the higher high
3. If I were to trade this market I would wait to see what price action tells us at near term support, the eventual channel breakout (which could be down of course) and on any retrace to then assess the likelihood of the Bear trend sticking.  If I get confirmation of a Bear trend then the only sane trades are Shorts.

 

[Mercury]

I too use Fundamentals for long term trend assessment @TrendFollowerand while I could build a picture for a long term rally (the Peak Oil argument), I can't see it happening from here, at this time, so a bearish move of some sort is indicated, I believe.  I am constantly looking at the long term for my road maps, only using detailed short term time frame technical analysis to identify an actual trade trigger that fits with the longer term prognosis.

In terms of your MA points, and based on what I know/have experience of re MA, which is not much, I can point to many occasions where price has dropped below 20, 50, 200 MA (I never look at 100 as it happens) and then reverses into a long rally (I have attached one on the current Oil rally trend below).  This happens during a natural retrace in the trend (based on Elliot Wave Theory - it is pretty consistent).  So the question remains, is this bearish move a natural retrace (or correction) of the beginning of a trend change?

Clearly I use a variety of technical analytical methods to help me determine this but, as said before, so far on Oil I cannot make a firm determination on this point.  I must wait for more information in the form of price movements.  What I believe to be the case (for the reasons pointed out in previous posts) is that this is a trend change and I will seek confirmation of this through price action in the coming month or so.  Once I do I will happily post a trade idea to short this market.  This does mean that a Trend follower who has gone short ought to be fine if his stop is above the previous high (again unless we see a higher high before the drop).

As an addendum to the MA thing, one of the indicators I am familiar with is the so-called Death Cross, where MA50 cuts MA200.  This is very much a lagging indicator but I do use it to add confirmation to a trend change and we haven't had it yet.  From an EW perspective we usually do not see the Death Cross until after the Wave 2 retrace has turned and run down a while, which is well into the big Wave 3 move and to late for me to enter my first trade but is very good encouragement for me of the trend direction.

[Mercury]

I will certainly post on this thread when I have a trade set up but I wont actually trade Oil at present, I have other markets I am preferring right now.

[phillo]

On ‎01‎/‎11‎/‎2018 at 15:23, elle said:

 

[phillo]

On ‎01‎/‎11‎/‎2018 at 15:16, elle said:

update  - blue demand zone hit

 

[Mercury]

[Guest Turnip230248]

Anyone trade oil on a 5 minute chart?

Profitable

 

[trade247]

9 hours ago, Turnip230248 said:

Anyone trade oil on a 5 minute chart?

Profitable

unfortunately not. Currently looking for an entry and on a longer term perspective. Don't want to catch a falling knife, but a mean reversion trade would be interesting to me .... but where that is poses the problem

[phillo]

some say trend lines are subjective & therefore should not be used in TA

[Mercury]

LOL! @elle thanks for that.  I agree with you that trend-lines can almost be drawn anywhere (assuming that is what you were getting at).  However all analysis is subjective as the key lies in assessment of the data.  Data does not lie, it can be wrong alas but assuming it is not the thing that lies is the misinterpretation of the data.  The skill and experience of the analysts is key and in particular their ability to be open minded and recognise and guard against any inherent bias they may have. Other people can often see this better than the analyst themselves.  There are techniques for self regulation as well.  For instance, regarding trend-lines in particular, I only take them as valid it there are a minimum 3 good touches and the more there are the stronger the line.  Parallel lines can be weaker so long as the dominate line (support or resistance depending on the trend) is strong.

[Nelsy-Boy]

Is is possible for oil to get down to 6712 mark. The current down on the daily seems strong enough. Are there any major support levels in between? If I have missed one would you mind pointing it out. Thanks!

[phillo]

long term , blue zone could be support  @6690 the bottom of it

[Nelsy-Boy]

Thanks Elle. So the top of the blue zone still counts as support and I suppose this means that there is still doubt over the next move.

[phillo]

I rarely take an exact level as support - hence the "Zones"

[Mercury]

Brent has travelled down through both of my support zones, albeit bouncing back up towards the lower one but the EW could is suggesting another leg down to the larger Daily Chart support zone and lower channel line of the current Bear move.  If we see a bounce off this zone then the retrace (or final leg) rally could be on.  I would say the better place to go Long from a risk adverse perspective is on a break out of the channel line above but a strong bounce and small 1-2 retrace off the lower channel line could also be a good place (allows close stops).  If I was seeking to trade Long those are the 3 places I'd watch for but I prefer to be Short this market when the next phase reveals itself as I believe the prevailing direction now (or soon) will be down.

 

[Mercury]

While price remains within the Daily chart down channel I can find no trading set up (unless you are already short from the turn, then I would stick with that for now).  I like to deploy a two part bet strategy in situations with such uncertainty as on Oil (and Stocks as it happens) just now.  That is to say I would take profits on half my Short position at either a strong rally away from a predesignated support rally point OR, more particularly, on a breakout of the upper channel line (always watching out for the annoying false breakouts.

I remain with my 2 rally scenario assessment so Longs only on channel breakout but if one were keen to take a speculative I would suggest that the recent price gap on the 1 hour chart should be closed before any strong rally.  This would be consistent with my EWT count (current mini rally being a 3-4) and I would therefore expect a final leg lower to the bottom of the channel before a rally phase of any interest.  If no such move occurs then the breakout through the upper channel remains on.

Personally I prefer to wait this one out and see where the rally takes us and trade with the new trend Short, if and when that is confirmed.

 

[Mercury]

Well @TrendFollower it is not all that hard, once I have a market fully analyses it is just a matter of keeping it up to date with emerging price action (including reassessments when indicated).  Regarding success rate, the analysis is about improving the chances of being right on a call and therefore on trading but the latter is more a matter of trading discipline than analysis.  I find that I tend to lose when I do not stick to my rules/systems, and in particular when I get attracted to short term price action.  What I can tell you is that when I purposely look to trade counter trend (as with the EURUSD recently) I am very tight on stops in case I am wrong/too early etc.  In that example it proved to be the case but I only lost about 60 points in that whole action, which I am more than happy with, considering the potential gains on offer.  Naturally the trick to it is executing well not just being right on the analysis.  However I start with the analysis.  I have to be right there or I cannot be right in my actual trading and that includes being right long term and with timing.  My philosophy here is "if at first you don't succeed, try, try , try again."

Speaking about oil, my big picture assessment is the same as yours (i.e. Short).  I didn't trade short because I am not focused on Oil right now NOT because I am bullish or negative a Short.  It is hard to call the tops of the market after all.  One method my analytical method provides for is a trend change conformation with a significant retrace of the first wave off the turn.  That is one of my 2 scenarios.  My trading systems is built to seek these confirmations to trigger a trading set up.  In this was I seek to  maxmise the chances of success, while minimising loss exposure.  But I cannot yet rule out another higher high, can you?  Therefore I prefer to wait for more price action to help me make this assessment.  I do not support a Long, except perhaps a very short term counter trend set up, which I myself would not take.

So that is where I am and why, I too have been open about that...  Also I have been open about the fact that I have not traded this market and why.  You have been asking if anyone has Shorted Oil, have you?  If so where did you decide it was worth Shorting?

 

[phillo]

"Downtrend" 

[Caseynotes]

Word on the street is that as the Saudis have been pumping at over capacity for a while now they will be forced to cut back soon because of reduced storage capacity and the need for industry wide plant maintenance.  

[Caseynotes]

[phillo]

On ‎09‎/‎11‎/‎2018 at 10:37, elle said:

some say trend lines are subjective & therefore should not be used in TA

Decide for yourself, but looking at these, I would say price is "reacting" to those lines

[Mercury]

I would suggest that, like yourself @TrendFollower, others were focused on different markets.  For me Oil is a difficult market with a few very big players who can influence direction with their trading.  I'm not saying they are doing anything nefarious but merely that when they change direction en mass you get very fast moves.

I can only speak for myself but I think there is much better potential in shorting stock indices (far further to fall in points terms) and going Long on safe haven markets such as USD, Gold and Silver.  This is my strategy and the main reason I am not interested in Oil.  You have to focus otherwise you end up spread too thin, miss out on good opportunities and just plain misread the markets price action.

Regarding downside for Oil, I think will go far further than $50 because I think the long term trend is still down not up.  If I am right Fibonacci retrace will give you an incorrect reading.  Time will tell the tale as always.

  

[phillo]

Spoiler

 

 

[Mercury]

Finally a training video that makes sense, probably because it is from a real pro trader...  Nice one @elle Way too much technical stuff for my taste, would never try to replicate that but I love to see others matching my set ups with different approaches.  His balance points don't quite work for Brent but there are others that do.  Like the guy on the video I would not be catching the falling knife, unlike him I do not day trade so will not be looking for the Long on this one, thought I believe there could be as much as a 62% retracement on offer.  I would prefer to only play the Short side of Oil as I believe this to be the big picture trend.  Right now we are getting a bounce and maybe a return within the daily down channel, which, if it sticks and rallies, would mean yesterday was a false breakout and overshoot.  Let's see...

 

[Caseynotes]

Yes, a very good video, I particularly liked the use of vwap on the weekly chart to find boundaries with support/resistance confluence then switching to market profile for a look at the daily distributions. Liked as well at the end when talking about price needing to get back above an area of consolidation before actually considering a long trade.  

[Mercury]

Agreed @Caseynotes, you gotta have confirmation or it is very high risk.  I don't mind taking a punt on a turning point with close stops where that makes sense but when it is counter trend, as this is likely to be, and with such a strong move, we cannot know where the retrace will start until price action reveals it.  In the case of Oil I can easily see another leg down short term, although I suspect the big drop is over.  I have noticed over the years that a first move of a trend change, especially a Bear move, often ends with a powerful push that exhausts the move, which then promptly reverses until it finds a strong momentum to sell again.  I think this is what we will see here.  IF we do I think shorting the retrace is a great move, and Fibs and Levels can really help identify where that optimal retrace peak will be (subject to price action confirmation as always).

[Caseynotes]

Yeah, there's a difference between taking a small speculative bet with a tight stop that you can add to later if it works out and trying to catch the proverbial 'falling knife' as was mentioned in the video @Mercury.

Yesterday's oversized bear candle may well have been an exhaustion candle where buyers were overwhelmed and filling a vacuum when others cancelled orders and cleared out to regroup further down, perhaps around the current level which was a major level of consolidation for the first 3 months of 2017. Certainly the current consensus is for the down trend to continue but every market needs pullback to reload the order book.

[Mercury]

Again agree @Caseynotes, it is interesting that the direction of this thread was teed up by @PandaFace asking about a potential Long set up and then @TrendFollower pushing a Short idea.  Hopefully PF took a pass, I think he said he did, if so score 1 for the value of the Forum when discussing actual trading ideas (we need to do more of this!  Don't be shy, just ask the question.  Doesn't matter if we use different techniques, in fact that is a plus!).  And in essence both PF an TF can be right, it's just a question of timing.  As for me, as shared already, I am planning for a strong retrace, which PF may care to trade Long.  Such a Retrace may allow TF to get in Short at a better price if he wants to take the next wave down.  Regardless of whether this is a major trend change (resumption of the LT Bear trend) or a retrace prior to a major rally the next wave down will be much bigger than the one we have just had.

Previously I outlined 2 rally scenarios and could not decide if the past 2 & 3/4 year rally had topped out.  Given the strength of this bearish move (and other technicals) I am now confident (90%ish) that we have seen the top and only one 1 scenario remains for me, that retrace and then push lower.  But let's not get to far ahead, we need to see the current move bottom out and a confirmed turn first.

[Mercury]

Adding a bit of weight to a potential Oil rally scenario is the possible bearish move beginning to muster on USDCAD (see separate thread).

[Guest Daddy Bandrew]

Been pretty bearish for the last couple week and currently cautiously bearish still, there are a couple big players with large shorts in the dated market so you're unlikely to see a huge correction until that fully prices out in the next two weeks. Personally I think we are close to the turn but feeling out the bottom could kill you

The cracks are really wide from the latest move so you'll probably get a fresh wave of demand from the refiners coming. Cold snap forecast obviously effecting Nat Gas which could filter thru. 70% chance of el Nino last time I checked.

Massive bets on the last rally are being reversed. The run up made little sense as well but it got papa wet for the naughty play. There are a lot of big unknowns but there are some things which are established on supply side. Shale will not work at $50-55 or at least not the whole size of drilling and companies. They remain cash negative at these levels vs. capex.

WTI is so low from a vitol play where they moved all of the oil out of Cushing to make supply appear tight when it was just all moved towards the gulf coast and the whole complex hasn't really recovered since