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A 'part' of trading yes, but TA is not trading. TA is about making predictions based on past behaviour. Most TA is pretty basic and not difficult to learn and understand, the problem is that any predictions they hint at still only have a 50/50 chance of success. It doesn't matter how much TA you apply or how often you update it.

Price action is live and constantly reflecting new information and correcting, constantly giving signals as to what it is trying to do. 

No reason why you can't have TA on a chart but trading is understanding the signals and responding accordingly in a timely fashion regardless of what the TA says. That skill is best learnt on a simulator, it's a skill you can't learn from TA.


 

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Ah so what is your definition of price action @Caseynotes and what constitutes a trigger for you to trade?  There must be some "science" to it otherwise how can a newbie learn, on simulator or otherwise, where would they start?  What would they look for?  What time-frames to look at?  How to decide which way the market is going from the price action?  What are the price action signals?  When is the signal confirmed and a trade is on?  Etc Etc.

 

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(Sorry about hijacking this thread)

Simulators are the best place to learn as you get a lot of practice and can run a lot of methods/strategies quickly getting a full report on each.

I can show an example in this trade I took this morning, it didn't actually work out, but it will serve a purpose. 

The 1 hour and 15 min charts showed a strong move up starting around 4 am on news.

The chart is the 1 min Dax, the 240 LWMA shows the strong trend so it's either buying pullbacks or breakouts. The pullback far left was too early for me but picture perfect.

The next opportunity was the break of the previous high on the close of the engulfing bar arrowed  with a stop underneath. The trade went sideways till a spike up around 7:30. Thought about bailing out there but the moves recently had been so strong so I moved the stop to beneath the spike bar (second red line middle of chart) and hoped to see a channel up but got a channel down instead to stop out above breakeven (red cross). After that the chart structure fell apart and the MA went horizontal heading towards NFP. 

So not complicated at all but all the pieces need to come together in the right place at the right time. It's also about feeling the flow and energy and the urgency as the candles are being laid down, you can just feel a move coming on but it takes practice.

image.thumb.png.6b6b7faf3c1bcbcf58663019337eb1f3.png

 

 

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Ok @Caseynotes, I think I get that and thanks for sharing.  Not trying to pick it apart here, as we agree it is all horses for courses and I don't trade at these time-frames so have no opinion as such.  Just for understanding then, what I think I'm seeing here is you identifying a bounce (price action if you will) off a support/resistance level and supported by the LWMA (which is a technical indicator), and perhaps using related news or other dynamics off chart, you go long.  I assume you have rules for where you can put stops credible and as you said you have to have a few things come together to place the trade.  Then in terms of trade management you look out for possible reversals of the original set up premise (the reason you took a trade in the first place) and make a determination as to whether to stay in and give it more time or cut and run.  Roughly correct?

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I'm looking for price to move between zones of sideways movement, or  levels, which it will do once all the buyers or sellers have been cleared out so it's very much Wykcoff (and very much TA but of a very basic nature).

Once a level has been rejected price will move on so looking to buy the first pullback or failing that the break through of the high at the start of the pullback.

Candle patterns or single bars in the appropriate position on the chart are the entry signal (such as the engulfing break through candle in my example) and stops go behind the entry pattern (or bar) and are trailed up at new higher lows.

Price may be intercepted before it gets to an old chart level by urgent sellers moving down to meet it and that will cause the candles (and MA) to go horizontal again so a new zone is formed, from there it's just wait until buyers or sellers are cleared out again and on to the next level, where ever and whichever direction that may be.

 

 

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@Caseynotes and @Mercury, I was just reading what both of you were posting and I have to agree more with @Caseynotes. That is not to suggest that @Mercury you are wrong. If you are making more profits than losses and . We can all be partly right but I tend to agree more with @Caseynotes.

Technical Analysis cannot predict future price movements accurately. They merely present an opportunity to speculate rather more efficiently with increased odds. The balance of probability can be swung in your favour but again it does not mean that your trade will play out how you think. In my opinion there is nothing like live price action. Past performance and patterns do not necessarily have to be repeated. Why should they be repeated? Monitoring live price behaviour and 'living and breathing' those prices is as good as it gets for me. Only then can one truly appreciate what is happening and what story the price action is telling us. 

@Mercury, rather than me repeat what I have stated many times in many posts about my trend following trading philosophy then it would be far better for you to read my thread called Trend Following by TrendFollower.  This will give you an appreciation of my trading style, strategy and philosophy. I am not suggesting this is the way for everyone to trade or that I am more correct in some way. Others may have far more time, capital and effective strategies than me. 

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Ok thanks for that @Caseynotes.  Our time-frames and methods are different but essentially we are doing the same thing, just using different rules and triggers.  Where as you are using Wykcoff I am using charting and Elliot waves plus both of us are using price action, albeit slightly different ones.  I only use fundamentals at macro levels and you use news and data real time, so we will always be at odds over this but I do not say that this is wrong for your time-frame, just that it is not useful for mind (agree to differ).

I do agree that TA alone, or any single method alone, is not particularly useful. I do agree with Buffett et al on forecasting and sticking religiously to that in the face of contrary price action evidence.  I have a set methodology to identify trading opportunities and a set of criteria that much be in place.  Some of this is delivered by TA but all of it require price action confirmation to trigger a trade.

The one thing I do do, that may not sit well with you is lay out scenarios (that appear to be forecasts but I call them road maps because I am most definitely not saying they will happen).  If the market starts following a road map I am more confident I can get in and manage the trade for maximum profit and to aid swing trading.  This is a vital component for me as I do not day trade.

Coming back to Oil tho... (and happy to resume engagement on methods elsewhere, all very interesting.).

Looking at the 1 hour the market is showing some consol at my first support level, right on the line actually.  Watching this now to see if the turn happens or it slips down to the next one.

Brent-1-hour_021118.thumb.png.5065f14d97d367cec494476cc505efdf.png

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10 hours ago, Mercury said:

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.

@Mercury, it is you who is providing the commentary on technical analysis and charts for Brent Crude. We can all see the downward bias right now and Brent is trending downwards. You state your analysis is leading you to believe a bearish play for Oil. This is why I asked you why you would not consider shorting oil. I am not suggesting that I would but I am asking why you would not. 

Instead of answering my question you have brilliantly deflected and turned the question back to me rather than answer it. You must be a great political genius. ?

We would all love to hear whether or not you would short oil, yes or no? My answer is yes. What is your answer?

1. Logic for the short is that it is trading below its 20, 50, 100 and 200 day moving averages. That is an indicator and signal for me. One could argue that a super aggressive shorter would have shorted oil once it went below its 20 day MA and an aggressive trader would have done so after 50 day MA. However one can still go short after 100 or 200 or anywhere in between. There are no hard and fast rules. One should have a trading plan, trading strategy, rules that they made which they must follow with discipline.

2. I have answered that above. Individuals based on their trading plan, style and strategy would decide. To keep things simple lets say one would open a short once the 200 day MA is breached. 

3. Stop losses are individual to one's risk management. Let's keep this simple and say 1% or 2% of the trade capital.

4. This is where we both have fundamental differences. I want to let my winners run so lets say one has a winning position in shorting oil then there is no point target and there are no timescales. It takes as long as it takes for the trend to reverse and your stop loss to execute. If the trade goes against you then your stop loss would trigger as above. If you are in a winning position then you may instigate a 'trailing stop' to ensure you exit with a profit. It takes as much time as required.

@Mercury, if you could please do the honours and answer your own question so that we can all learn about how you decide on a trade entry, risk management, stop placement etc. 

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Thanks for that @TrendFollower but in essence you are agreeing with both of  us because, as I have said many times, I am not predicting the future nor issuing a forecast.  I am merely laying out scenario road maps that, if the market follows them, offer opportunities to do as you suggest, which is to identify lower risk (or higher probability of success if you prefer) trades.  I also use the road maps to manage my trades in flight and to swing effectively along the EW waves.

I do take issue with one thing you say, but am not trying to convert you or anything, and that is that market history doesn't repeat itself.  The fact that in many markets there is a recognisible form to rallies and retraces; that Fibonacci retraces work, that supply/demand levels are retested and hold or are broken is all about patterns repeating.  The fact that this happens across many types of asset classes, (even bitcoin...), is telling for me.  To paraphrase @Caseynotes, with extensive study and practice one can use this to advantage.  You have heard the phrase, "markets have memories"?  The memory is the pattern repeating. Why would it happen?  Because humans are emotional beings not logical beings and herding is a real phenomena, along with group think, confirmation bias etc etc.  Humans are also evolved for pattern recognition, it is how we have become top of the food chain despite being much weaker than other animals.  Well structured technical analysis seeks to identify the group psychological dynamic to decipher and take advantage of this human nature.  It is all about sentiment, as I have also said before, and that is driven by the balance of greed and fear. This is why we see markets grind inexorably up in bull runs and crash much faster in bear runs (Fear is stronger than Greed in the end).

 

Regarding your method etc, I am only really seeking to understand you thinking on the Oil Short idea rather than your whole method, although I will check out the thread you suggest.  If you feel like it I would welcome a bit more detail on what you are thinking, or have already done on an Oil short.  Then I may be able to add some value (and get some in return or course)

 

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Looks like our posts cross each other in the ether @TrendFollower but thanks for that, I see more clearly where you are coming from.  One question though on what time-frame are you using MA, is it Daily?  I think you said Day MA so Daily right?

So I am most def not a politician, I speak too directly for that, I just wanted to understand where you were coming from so I could have context for any answer.  I didn't trade this market because I had others I was more interested in and I was unsure as to whether we have see it top out.  If I was going to trade it I would have looked for a 1-2 retrace off the bearish move from a rejection at the Weekly channel top line.  I would have looked for a turn back down at resistance, preferable at a recognised Fib level (62% is most usual for 1-2 retraces).  If I missed that first turn, often happens if it is swift, I will look for a smaller scale 1-2 and then a drop though support (or in this case a nice ice line from previous price action turns). Stops placed just above the Fib 62% pin bar as a reversal past this level negates my road map.  Once the move gets going ti can be pyramided at signficant retraces, especially any Flag or Pennant breakouts.

Now we look at the bigger picture again, the Daily in this case, which I have already been posting above.  Because I am not sure if we have seen the top of the move on the Weekly Chart, the wide channel is not broken so a trend reversal has not been confirmed and there was no significant NMD (aprt of my criteria set), I cannot rule out a higher high and the Weekly/Monthly chart Fib 50% is a likely candidate for the completion of the rally in my view.  If the trend has indeed changed then I would expect a Daily chart EW 1-2 retrace with the wave 1 being the current move down.  Therefore I am looking at likely support turning points and waiting for price action to confirm one of these (or some other, it is not a perfect science or anything, nor a black art...).  had I traded shorts I would be using TA to identify when to exit, based on my Long criteria and might swing trade this one as the move down leaves plenty of headroom above for a retrace to say Fib 62%.  I would then look for a breakout of the down sloping channel to confirm a rally BUT watch as retests of any breakout are treacherous and if it is a retrace the wave B can be ruthless, as we may have seen on EURUSD recently for instance.

Net I have 2 scenario road maps in play:

  1. Fresh higher high to conclude the rally at circa the Monthly Fib 50%
  2. Tops in already and EW1-2 retrace to good resistance then big move down in wave 3

The reason I would not Short now is that I expect a significant retrace, which will offer a much better entry.  I place Stops at strategic positions on my road map and only use a % rule as money management not to set stops, why would the market obey a set percentage?  That is a measure of what one is willing to lose not where price actions is suggesting a change in direction.

I Hope this helps but feel free to ask any follow questions you may have on Oil (if you want to continue a discussion about trading methods I suggest we open a new thread and keep this one about Oil.)

Brent-1-hour_021118.thumb.png.e1e4cfd0f890bb7158f2d5a89080d16e.pngBrent-Daily_021118.thumb.png.bb7a7d05f6577c9dae42987188c4a6ab.png

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Back to the trading then and going back to @PandaFaceoriginal question on Oct 29 (was it only a few days ago?) to go Long or not, the answer in hind sight was not (at the time it was not yet, we didn't have sufficient evidence of a rally).  Now price is getting hung up on the first of the support zones people identified.  A brief rally away was beaten back by the Bears and a break lower to the 7,000 mark (Brent) is indicated.  This fits with my EW labeling and crucially the bearish channel remains intact.

For of the Long term perspective I don't see much upside for Oil at present (see next post for updated assessment of the projections if you are interested).  I still can't rule out another higher high to the Monthly Fib 50% but I believe this is the less likely scenario.  I believe the more likely trend is now down but we should get a retrace of a significant nature before the main Bear takes hold.

Trading strategy (Note I am not trading this market so have no personal bias, except what the analysis and price action is telling me):

  • If you really want to go long the safest place to do it, I think, is a break of the upper channel line.  If a higher high occurs there is some pointage to be gained but a simple, say 50% retrace, would only offer about 400-500 point for quite a high risk as you are likely to be trading against the newly "established" trend down.  Personally this does not fit my criteria as the upside is limited so I would expect only those who believe Oil will continue to rally strongly through long term resistance to take this trade.
  • There is an alternative, more speculative, Long opportunity on a price action bounce off the 7,000 ish support area.  It is higher risk but lower cost impact potential as yo can set a tight stop just below the support zone (got to watch out for a stop out and rally away event with stop placement though)
  • Better bet for me is to wait and see how the next rally goes and look to get Short at good set ups.  The pointage on offer is far greater and it is easier to get into a retrace (sell the rallies as opposed to buy the dips but same approach) and this would be trading with the trend, once it is confirmed of course.

Brent-4-hours_061118.thumb.png.7cfd7ba40a99aa41ee859c3cbbcb0430.png

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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.

Brent-Weekly_061118.thumb.png.0545dc20436c0d7edbb1b01908f05162.pngBrent-Daily_061118.thumb.png.e93eeb9bba014472bec31b4d2264aab3.png

 

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@Mercury,

1. Agree with you based on current price action. I doubt you will find a single person who can see any upside potential based on current price behaviour. If anyone does come forward then it will be based on fundamental analysis. These would be more long term traders and investors in Oil.

2. I do not do road maps so no comments.

3. For me I am saving my capital for Cryptocurrencies so cannot allocate any capital to Oil right now but it is trading below its 20, 50, 100 and now 200 day moving averages so anyone looking to seriously short oil would either already have done so or would certainly do so now based on the price action and current trend direction. One may want to look at the strength of the trend, momentum and volume to support any decision making but the ingredients seem to be in place for a short trade as you would be trading with the trend rather than against it thus increasing your odds/chances of success in the trade. 

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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.

Brent-Daily_061118.thumb.png.499035569992db0a6108a1c95a10cec0.png

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@Mercury,

I take you the point you raise in your second paragraph and in my opinion it is certainly a short term trend change. Whether it is a long term trend change we will find out shortly but it is for me approaching a mid term trend change. 

I will be interested in knowing when you place your next trade and at what price like I have shared with the IG Community for Ripple and Stellar. Now I totally appreciate that the trades may end up being quite short due to the volatility or sharp trend reversal but we will see. 

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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.

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

Capture br.PNG

 

Capture brent.PNG

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

update  - blue demand zone hit

Capture cl.PNG

 

Capture wti.PNG

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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

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

Capture 4hr.PNG

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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.

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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!

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

Capture br.PNG

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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.

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

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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.

Brent-Daily_101118.thumb.png.beed9be8d3d2f6794f7c6c91be2b3266.pngBrent-1-hour_111118.thumb.png.020d84bf5d606ddd3a847ccac1ff23fb.png

 

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@Mercury,

Just watch how quick Oil goes down from the start of October 2018 before it corrects compared to any recent historical uptrend move. The speed in which it moves downwards will be amplified with a mixture of short positions opening, profit taking, selling, etc. 

From my experience the balance of probability on short trades especially in commodities for a successful and profitable position (as long as stop loss risk management is sound and effective) is greater than long trades in commodities. That is just my personal experience and others may have a different experience.

The downtrends seem to be stronger in commodities. Something to consider is volume and the data on open interest as these can be very effective indicators which can aid when making trading decisions.  

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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.

Brent-1-hour_121118.thumb.png.74369360182855bbd6e1c3d4c05c17df.png

 

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