Trading Crude Oil with price action + indicator

I'm already riding the short trend with Brent and Wti.

$DX
One does wonder, will this help eventually...
200 day MA under pressure.

Surely one wonders what next as the crude price keeps tumbling.

That thought gave me sleepless nights sometime ago till I made up my mind to
just follow and react as it unfolds on daily basis.

But then look at it this way, the same forces that dropped it from 107.66 in 2014 are the same forces that will jolt it back upwards again.
I think this might be sooner than we think because currently all stakeholders are losing profits on tumbling prices. They are forced to agree.

On a selfish note, I can say we traders benefit a lot knowing that its bearish no matter what effort it makes to raise its head----thats when we place big sell orders tumbles down.

I still do not think they will allow it to drop below 45.00. What do you think JimmyC

After my call to the downside Oil Trading – Oil is going down on the medium term. (Q1 2017) – Fundamentals, Sentiment and Price Action Analysis

I am now shifting my position to be long on the medium-term: Beginning to Think about Going Long – (Q2 2017)

After the recent correction in oil prices I think it may be time to consider building a long position.
Will regularly update this article.
My reasoning is based on three things:

1. (1) Market is no longer overbought
2. (2) Fundamentals are beginning to improve
3. (3) OPEC should announce new cuts
4. (4) Conclusion

(1) Market is no longer overbought

One of my main arguments for my previous short was the historical high positioning in oil futures. Professional investors were super-long but the price was ranging while the fundamentals were saying “the glut is still here and growing”.
After the recent correction, markets participants are now more mitigated.

During the week ended March 14, hedge funds decreased their net-long position, or the difference between bets on a price increase and wagers on a decline, by 23 percent to 288,774, the largest decline on record and the lowest level since December. WTI tumbled 10 percent during the period. Longs fell 8.9 percent to the lowest level since early January, and shorts doubled from the prior week to the highest since November

One can think that the still net long position in the market is now more sound and reflect the view of long-term investors (speculators have moved out).
At the same time, the liquidation of the unsustainable build-up in net-long positions takes away some of the harshness of the downside risk. Sort of like a safety valve that has relieved some pressure, the reduction in bullish bets means that there will be less of a danger of another sharp correction in prices stemming from speculative moves.

2) Fundamentals are beginning to improve

As always, fundamentals are the one reason for my long thesis.
I think we are at an inflection point.

1. Lag between cut and inventories data.

As I already mentioned in different posts:
How to Trade Crude Oil or Observations about Saudi Arabia Production and Oil Prices: Lag between Production Cut/Increase and Effect on Prices
There is a lag between production-related decision (here OPEC-cuts) and their effect on supply/demand and inventories. A rule of thumb is that you can bet on a 3-month lag on average. OPEC cut were decide around the beginning of December – add three months and here we are in March/April.
Some recent data already show this change in trend: lower build than expected, lower inventories in floating storage…

1. Seasonality

There was bearish seasonal factors in the U.S: it is refinery maintenance season and crude oil stockpiles are increasing. Once maintenance ends, inventories should start going down
The summer season is typically good for oil prices.
Spring: usually lower demand. Indeed refineries schedule their repairs during this period, roughly 25% close
In May the maintenance season ends -> refinery oil process increases -> stock level decreases -> price increases

(3) OPEC is coming back in the game

OPEC members and especially Saudi Arabia are strongly enticed to push prices higher.


When major market participants want something, and this is especially true in the oil market, history shows us that they usually succeed (see slash in output during the 2008 financial crisis and the huge recovery following).
When OPEC does announce – and adhere – to production cuts, crude prices rise.

 

1. Saudi Arabia

As we saw with the OPEC deal and the record compliance (120% for Saudi Arabia) – they are willing to commit and make huge efforts (deal with Iran- the archival!) to succeed in their IPO.

1. What could happen

Keep in mind Saudi Arabia is a big regional power, an allied from the US, a states that has contracts with numerous companies (energy, banks, industrial, defense..) worth billions of dollars .
They have different tools at their disposal to increase oil prices:
–Saudi Sate: announcements, position, influence and action.
Ranging from simple declaration to aggressive cuts.
–OPEC: announcement, position, influence and action.
Ranging from simple declaration to aggressive cuts.
-Big banks and institutions participating in the IPO will certainly have a “nice” and biased vision of the oil market – driving sentiment higher at the right time.
Ranging from reports to direct intervention in the market.

(4) Conclusion

I think that the present situation is now better priced in the market. the market is no longer driven by the OPEC.
This could be an opportunity if expectation were to go up drastically again. I think OPEC may soon interfere and we may enter a new cycle of “OPEC-driven market”, with the OPEC-May meeting getting closer
Partager :

Summer is near, we are probably not going to see sub 50 WTI again soon...

I think the distribution is taking place. I expect one more minor push up to cca 0.5$ above the current price and then downtrend should imho resume. (In case this level is strongly broken upward it would become a good support.)

k

Edit: It looks to me that the weak buyers are loaded (the total volume at each price is buy volume, but the smart money is selling tops). So it may be a quick drop either tomorrow or early next week to trap them.

Result

Seasonals: In April, DXY Is Down And Oil Is Up - BofA Merrill


https://www.efxnews.com/story/35699/...l-bofa-merrill

Fundamental are on a bullish side now. Yesterday's EIA report showed that the growth rate of oil reserves is low, it is lower than last year and below the 5y average.

Nothing like a little missile strike to bump Oil....

before the syrian strike I expected price to go down a bit but now I am wondering how high it will go. Based on my chart it looks like we have some very bullish days/weeks coming up.

Right now the may contract is running, it is on 33 RSI, market is oversold, so you should consider going on long with target 53.33!
Good luck!

Here is a Point & Figure Chart which is showing that Crude is building a base.
It may be a while before a breakout but it should be a large move.

oil in play, need more confirm to see $40

oil need mooooor to confirm stable uptrend

im target 50$ to get short...need to confirm with the reaction

oil in play moving in the channel 4H chart

In my opinion, we are going up on daily timeframe, but any upside will be limited, with market reacting to any sign of bearishness vigorously. There is some optimism due to OPEC being ready to continue with cuts, but if anything signals that might not be enough to keep the prices up and end the oversupply, the bears are gonna hit the markets hard, and sub 50 WTI is here to stay. First deciding factor will be already tomorrow.

Hope i can go short @ 48.90 keeping SL above 49.60