The case for Oil..

Hi guys,

I’m currently looking at a WTI Crude Oil as it’s getting to levels which are peaking my interest to say the least. It has been on a tear since June 17 moving from roughly $42 to a peak of $59 in November.

Given this, are we seeing a new bull run in oil? My views below:

US Oil – Weekly

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From a longer term perspective we can see there was a sharp price drop in this market in 2014 and price has yet to reach that level since. To me this still signals a bearish bias in this market with price currently ranging. Price has recently moved to the 2015 high of 60 where I expect it to run into some resistance.

Blog 11.2.PNG

What’s really interesting to note is that if we pop the fibonacci on there we can see that price has re traced to the .382 level which also coincides with the weekly 200 EMA and the 2015 high of 60.  Looking at it from this angle, this screams a shorting opportunity to me.

US OIL – Daily

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If we take a look at it from a daily perspective, it’s screaming bullish with higher highs and higher lows in place since June so it is possible that you can argue a bullish thesis. In my view however, given the level of confluence on a higher time frame being the weekly, I am biased to the short side for oil (higher time frames have taken longer to develop and confluence on those time frames therefore hold more weight)

From the daily chart we saw price pull back close to the 60 mark which is a key resistance zone identified on the weekly if bulls are to take this market higher.

US Oil – 4hr

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From the 4hr, we can still see higher highs and higher lows being made and in my view we still need more to develop before taking this trade short. It can easily run to the long  side and we need to be careful to not enter too early. At the moment price is sitting on the 4hr 50 EMA which can act as dynamic support and 57.50 which is the previous swing high on the 4hr. Given these levels of support, my eye is looking at what I need to see break before I’m comfortable taking this trade.

US Oil – 1hr

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On the 1 hr, we can begin to see the market turning down with a break of a 1hr trend line, a H&S pattern and a break below the 1hr 50 EMA. The major key here will be how price reacts to the 1hr 200 EMA (which is also the 4hr 50 EMA) and neckline at 57.50.

Once these levels breaks, we’re in with a shot for a trade short given sentiment has turned with the first level of support at the 55 region.

Hopefully from this example you can appreciate a view that was taken on a higher time frame and using the lower time frames to identify possible entries.

Let’s see how this plays out..



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