Oil @ 69.5, headed for 62.5. Down for 3+ weeks

(edited)

First fundamentally here are reasons why it is headed down.

This will be the 4th week that oil prices are down, for the trend which started from 50 and shot up to 76, this is very negative. If in fact there are supply issues. then there should be no reasons why oil should not shoot up to the consensus of analysts targets of $85 and $150. Most fundamentalists are dumbfounded why oil is not moving back up, they see the recent drop from $75 as some temporary drop, that will soon be over, and get oil back at $85. The biggest players who do follow charts, base lots of their hold sell determinations on the daily charts, and on very simplistic indicators such as the 200 moving average, the Macd, even some other textbook indicators, that have been used probably for many years, actually charts where first used in 1786, but actually sophisticated commodity charts was first used by the Japanese in the 1600s, Elliot Wave only came out in the 1920, Gann  came out about the same time. But notice this is 300 years after the Japanese system. knowing the evolution of charting, may actually give you an edge, Many of these old systems, are not even looked at today, and many people who do think they know how to use them, have shown how wrong they have been in the past, actually daily.

So that if one of these lines from the MACD touch the zero lines going down, that is very bearish and vica versa.  So right now WTI has hit the 100 Moving average line on a yearly chart, and the 200 moving average on that same chart sits at 65. We did hit 66 last week, but that line got protected when Saudi Arabia said they weren't going to flood the market. Remember though that when Oil prices are trading very thin, sometimes that could be in Australian markets, it is easy for big players Algos, for example, to move prices artificially and take shorts out. So that doesn't mean oil prices can not see the 70s again, but that would be temporarily if the prices are indeed heading down. So right now we have China reducing demand, most producers are up and running, Permian basin is producing at full speed, some countries overproducing. Logically its all a matter of time before the house of cards collapses, with potential for price spikes, by manipulators. Even though my charts have predicting fall of prices since 75, the price reversal at 66 caused me to fear a reversal might happen, but the upward move to 70, where I thought it would hit has been very weak, and moving a lot higher from here, 69.4 would take a lot of effort to pull off, but they will try and protect the 67 price and try this week to see if they can move the prices up, I want to wish them good luck. So prices will still be volatile this week, until they either break down, or try to break up to 76+, my charts are telling me they won't succeed..

Disclaimer. Futures are risky, you could lose more than you invested.

 

 

 

 

Edited by Top Oil Trader
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Sometimes I wonder why I need to find the news, how come no fundamentalists here, can't point out news bits that I gather. Forget charts all you need to do, is find the news, and you can easily see what is about to happen.

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(edited)

A billion barrels is enough to move the needle? You're saying this find could crash oil? And for a long, long time? How long?

Edited by BillKidd

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1 hour ago, Top Oil Trader said:

Sometimes I wonder why I need to find the news, how come no fundamentalists here, can't point out news bits that I gather. Forget charts all you need to do, is find the news, and you can easily see what is about to happen.

I don't know about others, but I certainly appreciate reading about the relationship between events and the charts.  The problem I have these days when it comes to news stories is that I don't know what is a real story and what is not.  I think, to your point, that it does not necessarily need to be true news about events on the other side of the world, it just needs to make the news and the markets react.  Do you see it this way?

You do a great job and it is appreciated.

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yes of course. I speak to lots of oil people. Whove been in the industry for years. They never claimed to be able to forecast the prices, and neither did the ceos of their companies. Of course they had hoped it would go up, so their investments wouldn't fall flat on their faces. Most who look at charts really have no clue, simply start watching analysts who predict future oil prices and see how off they are. Now these people have 30 years experience, and they still mess it up. People with hardly any exp. in charts won't tackle it of course, since they see the experts mess it up, so why even give it a try. But very few people have figure it out, like Simmons and Jones, those dudes are all in the billions by now. And the top investors, the big ones,  they laugh at the news and the analysts. The point being, the reason you can become a billionaire in this market, and not say in manufacturing cars, Tesla for example, his stock is up, but so far no profits, i guess to say his stock should be $2. But the reason some are billionaire is there is no competition, no one out there that we read of, has a clue. The people who do have a clue, is soros, buffet, simmons etc. People who hardly talk on the news about their positions. So yes charts predict future prices, the problem is noone knows how to look at charts correctly, to monetize it, except for a handful of people. But once you understand how charts work, u can trade currencies (very easy) stocks  (even easier) oil (hardest).

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AS a matter of fact, not too many hedge funds even the successful ones beat the sp 500. So the best of the best very low returns, and the rest big losses.

Here are some examples.

Last year for example sp was up 22% avg hedgefund returns 8%, there is more than 3 trill in assets. So yes some made it big, but most lost, how can you lose when sp goes up 22%? So as you see even the guys managing the 3 trillions in funds still cant figure it out. There is no competition out there.

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I see crude falling more and more - the US, Russia and Saudi Arabia are bent on reducing the price.

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Well.First of all Russia main GDP is based on oil Russia needs oil prices to be above 82 for it to balance their budgets. Quatar needs it be at 56 etc. So Russia does not want oil to go to 25, that means their economy would be kaput. The exports of Vodka won't make up for it.

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I want to place a trade on crude, possibly a sell, any advice ?

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I cant give advice. You need to understand oil is very volatile, why (it is). Now from what i see in oil

it can easily go up 100 basis points or more for no reason, like it is doing now. a 100 basis move in the wrong direction is $1000 loss on a regular future, more or less the same as in currencies.

So if you are trading on very low margin, you can even get a margin call on a small move against you, assuming you had a stop, otherwise you can end up owing money to the broker, if it goes below your margin requirement. 

To trade Oil, especially if you are at margin requires almost perfect entry, unless you don't mind having it going against you, for a while or even for good. If you use fundamentals be ready to never know where the top or bottom is, wont happen, ever, you might guess it, but youll be off by like $10. 

Even with charts, you have to be good to know when it is reversing, and then its hard to know how much it will go down, all you can do, is get out when you see the next reversal. So no I cant  give advice, And when I trade it is right at the moment, when i see it reversing, we go in, and let it ride.

So having said that, I have yet to find, on the internet, or fb, or anywhere an oil trader who can predict with any kind of accuracy, when to enter and when to fold. The best I have found are usually $4 off target. as least.  Which means on just 10 contracts that would be a loss of $40k. Right now oil is almost at $70, a key target for bulls, who are hoping it will continue up.

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I guess oil had to go past 70, just to scare out some shorts. Again the move up has no legs, WTI still looks weak.

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the Friday ceased to exist (cl aug) and they wanted more than 70

that’s  all

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1 hour ago, Top Oil Trader said:

I guess oil had to go past 70, just to scare out some shorts. Again the move up has no legs, WTI still looks weak.

Moving slow and kind of hanging @68.60.  Your thoughts at the moment?

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My thoughts are usually very simple. That I will be proven right, but like I said many times, with lots of bumps and diversions, as we see.

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Well WTI dropped 150 basis from its earlier high, something strange is happening, or maybe they are just getting back to reality.

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13 minutes ago, Top Oil Trader said:

Well WTI dropped 150 basis from its earlier high, something strange is happening, or maybe they are just getting back to reality.

You are good.  1 hour ago you said it had no legs after it hit 70.  It's at 67.80 now.

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I believe Trump's push to get oil prices down is the major short term effect on pushing prices down because it encourages Saudia Arabia and Russians to increase production in order to get favors from Trump.

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Yes Steve, certain   countries saw what happens if you don't play along like Canada. And would rather be on Trumps good side.

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(edited)

Hey JJ.  What do the charts tell you about the day ahead?  I assume you stand by your feeling of going down to 62.5 with a few bumps up along the way?

Edited by Dan Warnick

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Like I said many times the prices will be bumpy, this is a market that has lots of big players, a comment from one can make oil do a 360, a non verified news story and bring oil up.. If you play oil be careful, really careful. This market is best attempted by the big hedgefunds, who play it in one direction, usually bullish. Notice even those funds, some need to close with major losses, due to guessing it wrong, even with all their experts, and analysts on their team. Shorting into a trend where almost all are bullish, is really going into a boxing match, and fighting against 10 boxers at the same time.

So especially if you have no experience trading oil, or futures, you need to be really good, better than almost everyone, to be able to trade oil. If you don't like to lose, stay very far away from oil. Notice also it started to go  down 4 weeks ago, and after the first shock down, which caught all the analysts and producers by surprise. Oil, (WTI) is now heavily being supported at 69 - 70, understand there are some quotes in the low 60s, but those are future prices. One more big drop could be devastating to the trillion dollar industry, this is something that no producer wants. There is even some hedfefund now opening with 500 Mill, i expect they will be bullish, so well see how they do.

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10 minutes ago, Top Oil Trader said:

Like I said many times the prices will be bumpy, this is a market that has lots of big players, a comment from one can make oil do a 360, a non verified news story and bring oil up.. If you play oil be careful, really careful. This market is best attempted by the big hedgefunds, who play it in one direction, usually bullish. Notice even those funds, some need to close with major losses, due to guessing it wrong, even with all their experts, and analysts on their team. Shorting into a trend where almost all are bullish, is really going into a boxing match, and fighting against 10 boxers at the same time.

So especially if you have no experience trading oil, or futures, you need to be really good, better than almost everyone, to be able to trade oil. If you don't like to lose, stay very far away from oil. Notice also it started to go  down 4 weeks ago, and after the first shock down, which caught all the analysts and producers by surprise. Oil, (WTI) is now heavily being supported at 69 - 70, understand there are some quotes in the low 60s, but those are future prices. One more big drop could be devastating to the trillion dollar industry, this is something that no producer wants. There is even some hedfefund now opening with 500 Mill, i expect they will be bullish, so well see how they do.

Thanks, JJ.  Perspective and knowledge such as this is very constructive and useful.

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I trade downward moving prices using inverse ETFs.  While inverse ETFs don't eliminate all risk, the risk is limited to the price of the options contracts that you purchase.  There are 2 U.S. traded inverse ETFs that are directly related to the price of WTI oil, symbols OILD and SCO, but I don't usually find their "inversity" (is that a word?) to track as well as I think they should, in that the funds don't seem to react, inversely, as closely to the price of oil as I think they should.  I usually use ETFs that are a more broad mix of the oil industry and move based, in my opinion, on fundamentals and the health of the chosen industry segment and mix that you choose.  FWIW.

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