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Brent Crude rally ends, time for the big Bear!


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I actually closed my oil long on the back of this post (along with some other analysis of course) so thanks for the trigger to re-evaluate. 

First question for you is are you day trading Oil or looking for a longer term move?  If the latter (and probably in either case) then after such a sharp rally and reversal it is best to stay out for

potential channel break

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Crude is pooping out.  Looking for an exit out of my trade asap.

Given that the U.S.A. is the world's number 1 oil producer now, and the environmental pressure, maybe Brent is now permanently capped at lower prices.  Doomed!

Edited by dmedin
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Yeah the breakout never really materialised @dmedin so the Long wasn't on.  A long trade at the 6200 should have had a stop very close so that any reversal closes quickly or at a minimum a move to close or BE once the market put in that small rally up to 6300.  Any Longs from lower could be held at BE or cashed once the reversal was recognised.

The issue to be addressed now is whether the market is in a consolidation preparatory to a further break lower through the 5600 level or is in the beginning of a rising trend that will break to the upside.  My route map to higher highs remains intact so long as the wave B (blue) low is not broken.

So net the 2 levels of interest for me are 5600 on the low side and 6300 on the high side and until one of those is breached with the right price action moves we wont know the medium term direction.

On a separate note, I find Oil to be a very tricky market to trade and only consider it when at potential major turns with a high rewards to risk ratio, if at all.  There are better, more consistent and more forgiving markets, especially for beginners with small accounts.  FX is the best for this I think.  The trade du jour however was Short Gold, which is what I have been focused on tracking for some weeks.  I did trade a small position on Oil but closed it when I saw the reversal.

One other thing perhaps of interest is that to me trading is a bit like dingy fishing on a lake.  If you have several people fishing off the same boat and one gets a bite the others take their rods out of the water and stow them until the fish is landed.  When I caught Gold/Silver the other day I similarly closed off all my other interests until I was in a good position stop protected.  This is about focus but also about money management and overall exposure management.  Speaking of which, over to my Gold/Silver thread...

Brent-Daily_081119.thumb.png.cbe8fef20e54743e64b4b33c727c23e3.png

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  • 2 weeks later...

No breakout this week obviously but yesterdays candle was a spinning top, which either means a tend change of a breakout is on the way (yes up or down...).  Still if we do see a positive candle on Monday that breaks higher that will most likely be a breakout confirmation.  As such the upside potential is fairly significant and the move could be fast and furious.  On the negative side, with the USD is rallying just now, and likely to continue for a bit, which could give some impetus to a breakout, the longer term set up for USD is bearish.

Brent-Daily_211119.thumb.png.22b200c4911b001ff600dcdd7db4326d.png

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Brent has been making an effort to breakout to the upside but failing so far.  After a deep retrace within a rising wedge we now have a smaller, shallower retrace that seems to be providing a base for another test of that key resistance area.  With Brent an eventual breakout is likely to be fast and strong.  USD weakness might provide some additional impetus here.

Brent-1-hour_261119.thumb.png.e86c4096f03d0e1d736747cd33d14449.pngBrent-Daily_261119.thumb.png.302a4ff788319cf5c8c6cc6ac802d9fc.png

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@MercuryGlad you mentioned the Breakout because DailyFX just posted about a potential bullish movement on Brent and which points that are worth keeping an eye on. 

image.png

Check out the full article by following the link below and let me know your ideas.  

Crude Oil Forecast: WTI Oil & Brent Eye Resuming Uptrend Price Action

 
Please know this is just for your interest, not a trading idea. 
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Brent is stuck in a rising Triangle.  A resolution breakout to the bearish side may merely be a 1-2 retrace before a strong rally phase (i.e. delete the Triangle lines).  A bounce off the lower line may set up another assault on the upper line for a breakout rally.  If USD turns viciously bearish then Oil might get a boost, at least temporarily.  Tricky one to trade just now and I prefer other set ups so will watch and wait . 

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Crude price collapsing beneath supposed 'rising trend'.

Once again we see algos riding roughshod over the 'technical analysis' (and increasingly it seems that there is nothing technical or analytical about it).

Edited by dmedin
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19 hours ago, dmedin said:

Crude price collapsing beneath supposed 'rising trend'.

Once again we see algos riding roughshod over the 'technical analysis' (and increasingly it seems that there is nothing technical or analytical about it).

Not sure what you mean?  Looks more like the lower channel line has held and we have a small rally off it so far.  Of course it could reverse and breakthrough the lower channel line but that is a perfectly legitimate resolution to a wedge consolidation.  Chartists will trade which ever breakout occurs (up or down), just have to watch out for the all to frequent these days fakeouts, which many do attribute to algos.

Brent-Daily_041219.thumb.png.daa11dcdfc4f41c9e127a7966445b46f.pngBrent-1-hour_041219.thumb.png.c61baa4d7b38edd93845e7587cc99a0c.pngBrent-1-hour_041219.thumb.png.c61baa4d7b38edd93845e7587cc99a0c.png

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So Brent did indeed stay within the channel, retrace consolidation, whatever it turns out to be.  I am Long off the bounce and holding to see if we get a breakout through the top this time.  The EWT set up supports this and perhaps a lower USD will give Oil a bit of short to medium term impetus.

Brent-1-hour_041219.thumb.png.f2f6db628a99365852bf48bd22e95c6f.png

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22 minutes ago, Mercury said:

It's an open question rather than a call @dmedin, breakout is still on, just need to wait and see which way it jumps.

could be an idea here to trade this which I saw in the analysis on the dashboard

 

Oil Trading ahead of the OPEC event; long straddles and breakouts

Technicals hold less relevance in the face of fundamental events, and hence pivot points are at risk of easily being broken as market-makers will be holding less liquidity going into the event, enticing breakout strategies (to the upside or downside) over reversal strategies, and where fading strategies ought to be avoided as they are more prone to being stopped out.

However, another strategy to consider involves options, specifically a long straddle on the daily. A long straddle involves a combination of purchasing a call and a put simultaneously, with the intent to profit should the market produce a big move up or down, the likes of which has a tendency to occur with a fundamental announcement like that of an OPEC+ meeting."

 

if you did that you'd be looking at a 76 point move required in either direction to profit. could be possible given the volatility we've seen

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Looks like a confirmed breakout on Oil at last but we may see a bit of whip saw price action before it gets going, perhaps as USD also sorts itself out directionally.  I could see a small bearish retrace to retest the breakout zone before a strong rally when USD turns sharply down.  One thing a lot of analysts have been pointing to in opposition to recession/crash calls is low (relatively) oil prices and the consensus seems to be for oil to stay low, thus supporting the never-ending bull story so a contrarian bullish move on Oil would an interesting development that may resolve many markets, not just Oil itself.

Brent-Weekly_071219.thumb.png.bf6c34f49e8e169aa815e483e4a30caa.pngBrent-Daily_071219.thumb.png.3b5c3d819a7a14799d5f27e5043e800e.pngBrent-1-hour_071219.thumb.png.45a8f98430dce9e1eb38c06b02875017.png

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7 hours ago, Mercury said:

a contrarian bullish move on Oil would an interesting development that may resolve many markets, not just Oil itself.

 

If Brent crude prices go up too high, the U.S. will start ramping up its own production and finally end the U.S.'s reliance on oil from unpleasant Middle Eastern and African regimes.  (Well, then maybe China might move in on them!)

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13 hours ago, dmedin said:

f Brent crude prices go up too high, the U.S. will start ramping up its own production and finally end the U.S.'s reliance on oil from unpleasant Middle Eastern and African regimes. 

Requires Fracking big time.  At present Fracking seems to be the devils work in the Zeitgeist.  I imagine that will change when the lights start going out... 

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Brent seems very reluctant to break out.  With USD rising, at least temporarily, and with a possibility of a stocks rotation down (before Christmas?  surely not!!!) Oil looks to me like at a minimum another leg down within the rising channel is on.  Depending on how price action progresses I would also be looking for a break of the lower channel line to set up a deeper retrace to the Fib 50-62% levels, which would set up a wave 2 turn into a strong wave 3 rally.  Outwith any particular Oil supply/demand issues, which trump everything else, A period of stocks weakness would be indicated and possible USD strength during a bearish retrace in Oil.

As indicted I am Short Oil for a short term tactical trade but remain longer term bullish.

Brent-Daily_171219.thumb.png.0ef4aba6e25d26c244217a3cdd158d6e.pngBrent-1-hour_171219.thumb.png.8fca0148eaaaff7fc69a5e8d34a01d26.png

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