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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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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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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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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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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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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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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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