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Crude Oil (WTI)

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@Mercury,

You obviously conduct some very detailed analysis and rules in place in order to open a trade. That is commendable. 

I do wonder if your methodology increases your odds of a successful trade? I appreciate in 'theory' it should. All the hard work you do in conducting such detailed analysis should be rewarded with more successful and profitable trades than most of us here on the IG Community. At the very least it should stack the odds in your favour. It would be interesting to know if such a method translated into superior trading performance. 

For me looking at the price action for Brent Crude and US Crude the only trade has been short from the start of October 2018 till present. That is nearly six weeks worth of price action. I have been pretty open and honest about such thoughts. If I am wrong then that is fine I have no issue with that. My thoughts are based simply on the price action and volume indicators using very simple and basic technical analysis. 

I wonder how many on IG Community have opened a short position on either Brent Crude or US Crude since October 2018? It would be interesting to know. If so why and what was the methodology behind opening the short?

Different traders using different trading styles can interpret the data and the signals presented in different ways. This is what makes trading so unique and interesting. At times there can be no right or wrong as it does depend on timeframes for certain traders. 

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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?

 

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@Mercury,

No I cannot rule out another higher high on Oil but then again no one can. What I would say is that Oil seems unlikely to make a new higher high in 2018 based on the charts and looking at the time it took historically to make new higher highs. Having said that if some monumental news came out which could have a severe impact on Oil then anything is possible. At the moment it seems very unlikely that Oil will make a new higher high in 2018. 

As I mentioned before in a previous post many posts ago that I have not shorted Oil as my capital is being saved for Cryptocurrencies. I also previously stated that if I was trading Oil then at the time of my previous posts it would have been to open a short trade based on price action at the time of my previous posts. 

If you look at the chart (below) then it is very interesting. The 20 day moving average has crossed the 50, 100 and 200 day moving averages and gone beyond downwards. 

 

46462098_Oil-BrentCrude_20181112_14_45.thumb.png.a74b0c6aa465d572ed241ce4d4f84ec8.png

 

I would have most probably opened a small short once the price had crossed the 20 day moving average and then added to my positions when the price crossed the 50, 100 and 200 day moving averages. Oil has also crossed its 300 day moving average and is one it way towards 400 and 500 day moving averages as the chart below highlights. 

1069528206_Oil-BrentCrude_20181112_14_48.thumb.png.ad268502fb0737f28e2fc38c8176745c.png

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The smart trade would have been and still could be (might not be too late)...

Long Natural Gas and Short Oil (either Brent or US Crude)

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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.  

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I do wonder if US Crude will now try and go for the psychological $50.00 area. 

Those who use Fibonacci retracements may feel that Oil has further downside to go.

76.4 % Fibonacci retracement from the recent high takes us around the $50.48 area. In my personal opinion I think this could be enough for it to briefly pass through $50.00, it may not be for long but one thing is for sure, Oil has been a strong short during the past six weeks, that there is no doubt about. 

What staggers me is that not one person on the IG Community has responded to my previous post by stating they are shorting oil. What better profit potential opportunity has presented itself in this same time period?

I openly admit that I have made a grave error in not allocating my capital efficiently on this occasion and I have learnt a harsh lesson. One that I do not wish to repeat going forwards. 

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

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

Capture 4hr.PNG

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

Capture oil.PNG

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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.

  

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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...

 

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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.  

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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).

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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.

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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.

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

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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

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Retrace rally looking more likely with an hourly candle close inside the Daily channel.  However I would like to see a small bearish retest of the lower channel line and rally away OR a fresh lower low and rally back inside the channel to be more comfortable.  Ultimately for me I will not be comfortable until I see a breakout of the upper channel line, at which point I will be watching the price action on the retrace for a turn point back into the claws of the Bear.  I am preferring counter trend rally Longs on EURUSD to Oil at present.

Brent-1-hour_141118.thumb.png.52f6975bbd208c60f7162df07d61c8f2.png

 

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Oil is the flavour of the month but it’s getting hammered. Didn’t take a position but was close to! (Or May have been in and out but out the last couple weeks). 

Itchy palms now tho...

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feeling bullish, with the expectation on Saudi to keep releasing bullshitty announcements for the 2-3 weeks before acting. Keeping a close eye on freight rates as the really high freight rates are the only thing that stopped China lifting European barrels, which made the global demand seem subdued incorrectly, and exacerbated the sell off.

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Itchy palms got the better of me and I took a smaaaaallll position out last night. Wish I had seen that bid Nat Gas offer Oil trade @TrendFollower suggested 😂 but now just looking for a reversal over the next three weeks or so - position split in two 30/70 with stop relatively far out for the 30% and just below recent low on the 70. 

WTI price target towards the 70’s with a trailing stop kicking in long distance but small step added. I.e. take into account market vol and gives it space to breath but also pulls it up as the week progresses. 

Expect an interesting few weeks on this one.

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@PandaFace,

What I do not know yet is whether today's 4% move upwards in Natural Gas is the beginning of the next leg upwards (long trends can last a lot longer than one may think) or whether it is the beginning of the unwinding of the 'speculative froth' which will lead to stop losses triggering which will lead to trend followers shorting Natural Gas and along with way long trades closing?

I would describe the trade you have describe as a pure speculative trade based on hope. There is nothing wrong with a speculative trade. I recently participated in two in Ripple and Stellar based on the price action taking them above 20, 50, 100 and 200 day moving averages and was fortunate to exit both on very small profits but in hindsight it was the wrong trade.

However, you have entered a speculative long trade with the trend and price action against you. There is a saying that never trade against the trend. The odds and balance of probability are not in your favour. You may get lucky and you may even be fortunate to make a profit from this trade.

I will be interested to see how you fare on this trade. Your best 'hope' and I hate using that word in trading as words like 'hope' and 'luck' are like swear words in trading, is that there is a strong counter trend movement / trend reversal that is in favour of your trade. None of us can predict what is going to happen going forwards so this is a very interesting trade to study. 

Keep posting your thoughts on the trade you have executed as this will be a very good trade to share with the IG Community and well done for sharing it. It does not matter if the trade goes against you or you make a loss. It is what we can all learn from it which is the most important thing and I commend you on that. Nice one. 👍

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