Well as I'm getting to go to sleep I happen to check out crude price action on my phone and notice something very interesting. It seems as we have a potential descending triangle pattern developing in crude. New traders may be wondering what this may mean (if your a more novice trader you shouldn't be trading any commodities IMO lol but if you are well idk what to say). Anyhow, I attached a link on this post with a chart that has an explanation of what a descending triangle is, and what it means in regards to price action. Another technical perspective to keep in mind is the multiple price rejections at the 50% Fibonacci resistance level. So all in all, I'm not personally trading my view on crude oil through the futures but through shorting leveraged oil companies. That being said, I always keep my eye on what the crude futures are doing before the US open, and any interesting price action that may be forming indicating bearish bias on crude which as you may know benefits my short positions on lev. oil companies.
What I would be looking for if I was trading crude would be for a break and close below the support level drawn out on the chart (roughly the $44.0 area). BTW I would be on the 1HR chart when looking for entry on a retracement back to the broken support turned new resistance. For those finding it difficult to find short entries in crude oil, the 1hr chart works fabulous for finding entries on crude oil. And if there is wide enough price ranges move up to the 4hr chart. This little piece of advice is geared towards swing traders not those looking to day trade crude.
Cheers, and hope you like the chart. =)
Komen
coolingla
⋅
Shorting oil at this level is penny wise, pound foolish.
Daniel.B
⋅
Then don't short it :)
smitheric1970
⋅
I think your break below 40, is right on the money, although I believe we are currently in a distribution area that will retrace to the 49 level. That being said, there is a ton of volatility during this distribution and again, your advice to look for the break below 40 will prove to be golden. Again, I love your charts Daniel, simplicity is beautiful!
Daniel.B
⋅
Yea I totally agree with you, until we get a break below 40 its just to volatile to try to trade it ATM. Thanks for your chart post on here and your input! Definitely added value to this post! =)
smitheric1970
⋅
Thank you sir! Early 2009 accumulation (bottoming process in crude) is an interesting one to look at regarding crude's current price level. I believe that we will fall further then we did in 2009 and will undergo a much longer bottoming process; however, prices swung from 49 down to 35, 3 times in only 3 months.
Daniel.B
⋅
No prob Eric, you make very valid points backed by good analysis which is something I & other authors always appreciate here on T.V.! Yea this time around it can very well be a much longer bottoming process with fairly wide price ranges! =)
jarrod.baker
⋅
totally new to this but i think its fun. can i get some feedback on this?
Daniel.B
⋅
Hey how's it going Jarrod, you need to ask a more specific question so somebody can help you.
jarrod.baker
⋅
hmm... when you look at my chart, can you see my logic behind my analysis? Or are my lines drawn arbitrarily? Is your first thought when you look at this, "this guy is a damn fool, no idea what he's doing."
smitheric1970
⋅
hahaha I call myself a damn fool whenever I make the wrong trade! Personally I think you are showing a similar descending triangle as Daniel but with an expected break to the upside. I would ask why you expect the upside target? Not arguing with it at all, just curious, Lighthouse has a bullish pennant view, although, if we do head back uphill there seemed to be a lot of distribution happening at the 49 area. This 35'ish to 49 range goes back years. I'd like to see another retrace up to 47-49 for another great shorting opportunity but personally don't think it will go any higher than 49.5. Right now it looks like prices are breaking down but I've added in a short term possibility chart of a fake below the triangle and back into the distribution range.