WTI - US OIL

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Original post - 8th Nov 2019

Posted here - 8th Nov 2019

 

[WTI Update] WTI reversed just about 15 pips from the key resistance at 58.09 as its test was disrupted by news that China tariff rollback faces fierce opposition. The news catalyzed the drop till the critical key support at 55.82, just a few minutes back. 

WTI has again bounced off EXACTLY from this key support at 55.82, a few minutes back. As long as the critical key support holds, the bullish micro-pattern remains valid. No change in the technicals as long as the critical key support holds.

Original post - 6th Nov 2019

Posted here - 8th Nov 2019

[WTI Update] No change to the previous update. 

As anticipated in the previous update, WTI has come back in a second attempt to retest the key resistance at 57.38. In an event, 57.38 sees a sustained break, WTI may target the next key resistance zone at 58.09-58.46.

55.82 is the critical key support that needs to hold for this bullish micro-pattern to remain valid.

Important to protect/lock gains by managing stop losses.

 

Original post - 5th Nov 2019

Posted here - 8th Nov 2019

 

 

[WTI Update] As anticipated in the previous update, the key resistance at 57.38 has been hit. Clearly, WTI failed to break this key level in the first attempt & has reversed exactly from it. Another attempt, however, cannot be ruled out.

In an event, 57.38 sees a sustained break, WTI may target the next key resistance zone at 58.09-58.46.

55.82 is now a new layer of critical key support that needs to hold for this bullish micro-pattern to remain valid.

 

Original post - 4th Nov 2019

Posted here - 6th Nov 2019

[WTI Update] 

[FUNDAMENTALS] Keep an eye on two major fundamental events in the next 4-6 weeks. 

1] Aramco IPO:  Saudi oil giant, Aramco, the most profitable & valuable company in the world, is going public. Its IPO prospectus is expected to be released on Nov 10 & listing is scheduled in Dec. It is likely to be valued at $1.5 trillion. Potential bankers contesting to grab a role/mandate for this hot deal include the largest institutions - Morgan Stanley, Goldman Sachs, Citi, HSBC, JP Morgan among others.

When a company goes IPO, it makes every effort to project its product, balance sheet & future road map in the best light to garner high interest from the investors & the public. This includes extensive road shows & ad campaigns to ensure that the valuation expected at the IPO is maintainable.

Aramco is a state owned oil company. Majority of its profits come from oil. It's valuation, among all other balance sheet & future road map criteria, depends heavily on the price of oil.  The last thing they would want is for oil prices to trend significantly lower in the midst of the launch of such an important event or milestone in company's history. 

The other point is that the investment bankers listed above are all big institutions who would have a personal stake in the success of the IPO, ideally with very high valuation, since their fee shall be directly linked to this valuation. These institutions also have a commodity trading division which can always be called upon to regulate ideal price points [in the short term] to ensure the IPO is launched smoothly.

In a nutshell, there remains a good possibility for oil prices to be supported during the IPO window to facilitate sufficient investor interest.

2] OPEC meeting: OPEC members are scheduled to meet on 5th & 6th Dec & there have been preliminary statements around the possibility of furthering the current cuts or even considering additional cuts. 

OPEC seems to be preparing in advance this time to avert an event similar to that of last year where WTI plummeted to 42 levels [in Dec 2018] & OPEC members got into a panic huddle in Jan 2019 to belatedly respond to the fall. Prevention is better than cure seems to be the idea here.

The two events above shall contribute significantly to the direction of oil in the IMMEDIATE/SHORT TERM [Nov - Dec].

[TECHNICALS] 55.40 is a key support followed by the 54.73-55.08 critical key support zone. As long as these levels hold, WTI has the potential to retest the recent high at 56.43 followed by the key resistance at 57.38.

From a trading perspective, the fundamental events listed above can bring substantial volatility in oil. Please maintain the best practice of operating ONLY near key technical levels with small positions & good risk management.

Original post - 1st Nov 2019

Posted here - 6th Nov 2019

[WTI Update] WTI is moving in line with the previous update so far & is now approaching local oversold condition. 

Shorts from the resistance zone near 55.57 earlier today should continuously lock/protect gains by moving stop loss.

Original post - 31st Oct  2019

Posted here - 6th Nov 2019

[WTI Update] WTI has reversed from the resistance at 57.57 mentioned in the previous update & is now on the brink of testing the critical key support at 54.50-54.68 for the third time. 

In an event this support retests & breaks, WTI has the potential to head to the next key supports at 54.05 & 53.42.

Original post - 31st Oct  2019

Posted here - 6th Nov 2019

[WTI Update] Not much has changed since the last update from a technical point of view. 54.5-54.68 remains the critical key support & the gate to the bearish set up. This gate has now been tested twice & the support has held. 

Important to note that each time a critical level is tested, it tends to lose some strength. Sharing an easy analogous example to understand this phenomenon.

Think of each key level as a fort protected by a garrison & each time it is attacked, the garrison gets weaker. In this case, 54.5-54.68 is a fort being protected by the bulls. Every time the bears attack this key level, they breach the level by taking out a few traders through stop loss runs. Multiple attempts weaken the fort and makes it vulnerable to further attacks & a potential sustained break.

Now back to the technical update:

For WTI to strengthen the bullish set up, it shall have to take out the key resistance at 56.92. A local resistance has also formed at 55.57-55.71. Unless the above key resistance is taken out quickly, the probability for the retest of the 54.5-54.68 critical key support increases with each passing hour. 

FOMC reactions & NFP release in less than 18 hours has the potential to introduce substantial volatility, especially in US session. Kindly operate very close to the key technical levels with small positions & tight SLs.

Original post - 29th Oct  2019

Posted here - 6th Nov 2019

[WTI Update] WTI has bounced EXACTLY from the 54.68 critical key support zone mentioned in the earlier update today. Any longs taken from the critical key support zone should maintain SLs at cost or right below this key support zone. 

Important to be aware that there shall be API, EIA & FOMC related volatility in the next 24-36 hours. Kindly operate with tight SLs.

Original post - 28th Oct  2019

Posted here - 6th Nov 2019

[WTI Update] Hovering right around the key resistance zone at 56.47-56.67 since Friday. In an event this level is taken out, the rally could extend to the next key resistance zone at 57.3-57.45. 

The new layer of key support zone is now at 55.71-55.93.

Original post - 24th Oct  2019

Posted here - 6th Nov 2019

[WTI Update] In our previous update, we had mentioned that a sustained break of the key resistance at 54.8-54.99 shall target 55.42 & its extension key resistance at 56.47-56.6. The break did come yesterday after the inventory report was released. The news flow around potential OPEC cuts in Dec had already provided some tailwind to WTI.

This move has certainly started to question the bearish set up & WTI is also attempting to make a transition to a weakish bullish set up. On the larger macro-pattern, however, to get a preliminary confirmation that a local low is in place, bulls shall need to decisively surpass 56.6. 

54.02 is now the new key support. 

54.50, 54.98, 55.31 are local supports.

Original post - 18th Oct  2019

Posted here - 6th Nov 2019

[WTI Update] 

US China phase 1 trade deal [yet to be papered] early this week & Brexit deal development yesterday have provided some fundamental support to WTI. Basically, the global demand story gets healthier, when larger economies choose to collaborate & partner. That said, important to note that both these deals are at a very preliminary stage and are nowhere near closure yet.

While US China Phase 1 is yet to be papered, Brexit needs multiple parliament nods which has failed in the previous attempts.So, in a nutshell, fundamental risks remain.

WTI operated in the 52-53 region for the last many days and has finally broken out of this narrow range on the back of the two deal developments. 

A new key support has now formed at 53.47. As long as this key support holds, a retest of 54.92 and 55.42 key resistance remains on the table.

That said, a break below 53.47 shall take WTI back to the previous micro-pattern for a retest of 51.4.

From a trading point of view, please refer to 53.47 as the pivot level

Kindly operate near technical levels with small positions and tight SLs

Original post - 18th Oct  2019

Posted here - 6th Nov 2019

[WTI Update] Another massive divergence between API prediction & EIA actuals. While API projected a bullish draw, EIA actual data was a sizable build. API is just reliably unreliable.

On the technicals, we have maintained since last week that WTI continues to be in a bearish set up until 57.34 key resistance gets taken out. We have also continuously cautioned members against long positions since WTI is clearly in a technical breakdown zone.

From a macro-pattern perspective, WTI is again hovering near another critical key support at 52.71 which if broken shall expose much lower zones with key supports at 51.48 followed by 49.89.

Again, long positions should be completely avoided until clear technical wave patterns get formed at lower levels. Shorts from last week should continuously move stop losses to protect/lock gains.

 

Original post - 22nd Sep 2019

Posted here - 25th Sep 2019

 

[WTI Update] 59.92 is now a critical key resistance. As long as this holds, WTI has the potential to target & test the key support of 56.7. Extension is 55.98.
 

Original post - 19th Sep 2019

Posted here - 25th Sep 2019

 

[WTI Update] A news linked abrupt rise followed by another news linked plummet, a $15 range, all in a matter of just 48-72 hours.

On the macro-pattern, both the levels, key resistance at 63.34-63.93 & key support at 57.40-57.76, provided in the previous update, worked quite well. Always keep in mind that while fundamentals provide direction & catalyst, technicals articulate the depth & levels of a move. They always operate hand in hand.

While the precipitous fall in WTI has been contained "so far" by the key support at 57.40-57.76, it has also formed three new key resistances at 59.92, 60.5 & 61.24 in the process.

As long as the key resistances hold, WTI shall remain vulnerable and a retest of the key support is on the cards. A potential break of this key support may take it back to the 55-56 zone.

From a trading perspective, kindly operate with the best risk management techniques [Trading near key levels, small position, 1% rule, tight SL, trailing SLs continuously etc].

Keep in mind that there shall be constant news flows & statements from Saudi, Iran & US and this shall result in frequent knee jerk reactions & sizable moves.

 

Original post - 17th Sep 2019

Posted here - 25th Sep 2019

[WTI Update] As anticipated, WTI did approach the key resistance region at 63.34-63.93 yesterday and in the first attempt failed to break it.

It actually receded about 10-15 pips away from the key resistance zone. When oil is making $10 range moves in a day, 10 pips is a drop in the ocean

The latest news that hit the wires [from Aramco] has accelerated the decline in the last few minutes through a knee jerk reaction. We had cautioned about frequent news flows and reactions in yesterday's update. This shall be the NEW NORMAL for the next few weeks.

The key support region remains at 57.4-57.76 as suggested in the previous update.

From a trading perspective, kindly operate with the best risk management techniques [Trading near key levels, small position, 1% rule, tight SL, trailing SLs continuously etc].

Keep in mind that there shall be constant news flows & statements from Saudi, Iran & US and this shall result in frequent knee jerk reactions & sizable moves.

Also, API later today, EIA & FOMC tomorrow shall bring substantial volatility. We shall share clear tradable micro-patterns once these reports are out of the way.

Original post - 16th Sep 2019

Posted here - 25th Sep 2019

[WTI Update] Fundamentally, sources suggest that the Saudi production outage is expected to last at least 2 weeks with the expanse of damage leading to extended repair timelines. Once repaired, production needs to be reconfigured which shall also delay the start up process.

Keep in mind, Saudi has an export contractual obligation of at least 6.2 million barrels per day in October to various countries. They will have to extract this volume now from their domestic storage or offshore which shall put tremendous pressure both on their export volumes & timelines. This shall ultimately impact the inventory figures released week on week into the end of the year. Overall, needless to say, there remains a strong tailwind on crude prices from a fundamental point of view.

Technically, the weekend gap up earlier today took out a number of key resistances. On the large macro-pattern, WTI has now formed a key support region at 57.40-57.76. As long as this holds, WTI has the potential to retest the key resistance zone at 63.34-63.93.

From a trading perspective, kindly operate with the best risk management techniques [Trading near key levels, small position, 1% rule, tight SL, trailing SLs continuously etc]. Keep in mind that there shall be constant news flows & statements from Saudi, Iran & US and this shall result in frequent knee jerk reactions & sizable moves.
 

Original post - 13th Sep 2019

Posted here - 15th Sep 2019

 

[WTI Update] WTI bounced off between the two key supports at 53.66 & 54.32. 

As long as the key support of 53.66 holds, WTI may target the key resistance of 56.8. This is our primary scenario.

From a trading perspective, any longs near the key support region from yesterday should move their SL to cost and trail stop losses continuously. 

 

 

Original post - 12th Sep 2019

Posted here - 15th Sep 2019

[WTI Update] WTI has moved exactly in line with our technical update.

Yesterday, we had mentioned that WTI stands a good chance to reverse from key resistance of 58.72 and it did. We had also shared  the target near the 55-56 zone and the region been hit. Shorts from 58.70 should book gains here. 

 

We have always strongly maintained that reports should NEVER be traded, they should ONLY be observed for reactions. Only TECHNICAL LEVELS should be used for trading. If one could easily make money by just seeing a red/green in a report, everyone would have been a trading billionaire. Also, keep in mind, that the big institutions use reports to trap small traders because a lot of them jump into a trade looking at green/red in a report.

 

Back to Technicals

On the larger macro-pattern, WTI has key supports at 54.32 and 53.66. As long as one of these key supports hold, WTI has the potential to set up a retest of 58.70 again.

Original post - 10th Sep 2019

Posted here - 15th Sep 2019

 

[WTI Update] WTI has reversed exactly around the key resistance of 58.72 as anticipated in the previous update. Any shorts from 58.72 should trail SLs to protect gains

Original post - 10th Sep 2019

Posted here - 15th Sep 2019

 

[WTI Update] In line with the previous update, WTI did take out the key resistance at 57.49 & hit the target of 58.12. 

Important for longs from last week in the 56 zones to continuously protect gains by trailing SLs or moving SL to cost.

From a larger macro-pattern perspective, WTI has transitioned from a strong bearish set up to a weak bullish set up now.

For this weak bullish set up to gain traction & strengthen, WTI shall have to take out the key resistance at 58.72 

As long as this level holds, WTI has the potential to begin a correction back to 56-55 levels.

 

 

Original post - 6th Sep 2019

Posted here - 15th Sep 2019

[WTI Update] WTI breached the 57.49 key resistance briefly yesterday but the breach did not convert into a sustained break.  As a result, it receded strongly from the resistance zone. 

Such a phenomenon is common near critical key levels as there are often a lot of stop losses placed around it & even a brief stop loss run results in a breach, not a sustained break. 

That said, also important to note that when a breach happens the first time, there is a reasonable probability for it to be retested. That seems to be the scenario we are currently dealing with.

We now have a new layer of key support at 54.55. As long as this holds, a retest of the key resistance zone at 57.49 is on the cards. Also, note that this is going to be a fourth attempt at the same zone & such multiple attempts increase the probability for a sustained break of such levels. 

 

Original post - 4th Sep 2019

Posted here - 4th Sep 2019

[WTI Update] As anticipated in the previous update, WTI hit the target & critical key support of 52.96, a few minutes ago. Since this was a key technical support, WTI has bounced off it.

Original post - 3rd Sep 2019

Posted here - 4th Sep 2019

 

[WTI Update] We have maintained from the last many weeks that the critical key resistance of 57.49 remains the gate below which WTI remains in a bearish set up & all bounces shall be strongly defended by bears. Last week too, an attempt to reach 57.49 failed with a strong rejection near the 57 level.

55.26-55.33 is now a new layer of key resistance and as long as this holds, WTI may be looking to set up a test of the critical key support at 52.96.

Original post - 7th Aug 2019

Posted here - 7th Aug 2019

 

 

[WTI update] In yesterdays update, we had anticipated that WTI shall retest 53.8 key support. Subsequently, we had also guided that 53.8 has a high probability to break since it is being retested for the third time in the last 7 days.

WTI moved exactly in line with these updates.

From a technical micro-pattern point of view, the next key support levels and targets are at 52.7 and 52.03.

Local resistance is now at 54.06.

Shorts from earlier this week should move SLs to lock gains.

EIA inventory in shortly. Expect volatility.

Original post - 6th Aug 2019

Posted here - 6th Aug 2019

[WTI Update] WTI hit the target and key support of 53.8 earlier today as anticipated in the previous updates. It is a fine example of how key levels work as great references and facilitate "low risk high probability" trading.

The see-saw between the key technical levels provided at least 250 points for the taking in the last few trading days, twice from 55.7 to 53.8 and again twice from 53.8 back to 55 zone. 

Next WTI update shall follow shortly

Original post - 5th Aug 2019

Posted here - 6th Aug 2019

[WTI Update] Last week, we had suggested that 55.78 is a key technical resistance and as long as this holds, a retest of 53.8 key support and target remains on the cards. 

There was a brief breach of 55.78 last week owing to a few stop loss runs. Post this, the price swiftly moved under this resistance again and is now attempting a move lower to the key support zone of 53.8.
 

Original post - 25th July 2019

Posted here - 30th July 2019

 

[WTI Update] 55.32 is now a key support. As long as this holds, WTI can make an attempt to test the key resistance of 57.64

Local supports are at 56.15, 55.96, 55.68.

Original post - 17th July 2019

Posted here - 18th July 2019

 

[WTI Update] 58.74 is the key resistance. Unless this resistance is taken out, WTI has the potential to drop to 56.7 key support zone.

 

Original post - 10th July 2019

Posted here - 10th July 2019

[WTI Update] API has predicted a 8M Draw v/s a 3M Draw forecast. The bullish data has provided a tailwind and helped WTI break 58.2-58.4 CRITICAL key resistance zone in a sustained manner. 
 

The prices may get a further push to rally to the next key resistance at 59.7-59.9.

 

58.2 is now a key support.

 

Original post - 25th June 2019

Posted here - 28th June 2019

[WTI Update] WTI bounced off exactly near the key support of 56.66 shared earlier which keeps alive the scenario to retest the key resistance of 58.57 and 59.15-59.35.

Original post - 18th June 2019

Posted here - 18th June 2019

[WTI Update] 51.22 is the first layer of key support, right below which there is another key support zone, 51.06-50.6.

51.6-51.7 has also formed a local support zone.

 

Technically, as long as these support zones hold, a move to 55-56 is possible. 


 

Original post - 7th June 2019

Posted here - 8th June 2019

52.38 is now a key support. As long as 52.38 holds, WTI can make an attempt to move towards 55 region.

 

A sustained break of 52.38 shall expose the key support at 50.6.

Original post - 3rd June 2019

Posted here - 8th June 2019

 

On the micro-pattern, 51.06 remains a CRITICAL key support and should be able to hold this fall with a potential bounce to the 56-57 region. This zone NEAR 51.06 is an ideal place to attempt longs.
 

Original post - 1st June 2019

Posted here - 1st June 2019

[TRADING ONLY WITH TECHNICALS]

WTI Price action in the last few days is a prime example of why one should TRADE ONLY with technicals. Technicals provide precise trading levels and guide on the depth/degree of a market move.

On May 17th, based on technicals, we had suggested that inability to sustain a break of $63.6 levels would trigger a drop. The drop CAME!

On May 24th, again based on technicals, we had suggested that 60.06 is the most CRITICAL support, a break of which shall target $56-$55 levels, it HAPPENED!

Yesterday, we guided all members that the drop could be lower than $55 and that key support of $53.90 may be taken out and to stay away from long positions in WTI on account of global indices led by S&P showing signs of a downward move in wave(iii) which is the wave of FEAR. $53.90 HAPPENED AND GOT TAKEN OUT!

ALL THAT WE ARE SAYING is that one DOSEN’T have to be NOSTRADOMUS or BABA VANGA to do this. Trading is not astrology or an art of making predictions. It is SIMPLE TECHNICALS which is MATHEMATICS & NOTHING MORE.

Technicals combined with a SMART trading technique [Waiting for entry points near key levels, Tight SL, 1% rule], is an INCREDIBLE COMBINATION. More on Trading Technique covered here

No matter how volatile a commodity is, trading with ANXIETY & HOPE should NEVER BE AN OPTION. A technical trader with good trading discipline shall mostly be on the right side and most importantly trade with PEACE OF MIND. 

 

On a good day, the wins shall be huge. On a bad day, losses very small. With time, one shall realize that it is the ONLY way to sustainable progress.

Not prudent to trade on “HOPE.” If HOPE and MATHEMATICS were to run a race, Mathematics would win it by a mile, 99/100 times.

Original post - 31st May 2019

Posted here - 01 June 2019

[WTI Update] WORD OF CAUTION:- With global indices close to the heart of wave(iii), it is important to understand this situation thoroughly and trade with the the best of discipline. 

Heart of wave(iii) downward is FEAR just like on the way upward, it is GREED. If the floor on the indices does break open, the sell off will be quick & violent across the board. There will also be short term whipsaws. Under such circumstances, WTI may not respect the key support level boundaries of 53.90 shared with all members earlier and has the potential to head lower.

Please be cognizant of what is happening on S&P 500 and other indices & DO NOT trade out of context. If there is a bloodbath, it is not the best time to test LONG positions around key supports. Rather, it is time to look at the bigger holistic picture and wait for confirmation of the bottom to explore a long set up.

Preserving Capital should always be the first priority, Risk management is next & Profits should be third behind these two priorities. Please practice best trading discipline during such events.

Kindly check with us if in doubt. We are here to assist you 24/7.

 

Original post - 29th May 2019

Posted here - 31th May 2019

[WTI Update] As long as WTI remains below the key resistance zone of 59.85-60.3, it remains in a short term bearish set up that could push the prices to $56-$55 region.

WTI has also been under pressure from S&P which made a new low a few hours back breaking an important support of 2805. This increases the probability of a potential fall to 2700 if the trap door opens below 2775 putting more downward pressure on WTI.

 

 

Original post - 27th May 2019

Posted here - 27th May 2019

[WTI Update] 

The bearish surprise in inventory report last week was mainly on account of refinery throughput [~16.6 mb/d] coming significantly lower. We have gathered that heavy rains in Houston impacted refinery throughput for 3 days. Another refinery location [PADD 2] was hit with flooding which reduced the utilization percentage from 98% to 84%. 

There is also confirmation that some of the refineries decided to bring forward maintenance earlier rather than during fall season. This should result in higher refinery utilization during the second half of the year.

The other aspect that resulted in surprise bearishness was the Houston Shipping Channel accident - https://abc13.com/barge-crash-sends-spill-into-houston-ship-channel/5294832/. We have learnt that imports were prioritized over exports because of this accident.

Low refinery throughput & "imports higher than exports" were the reason for the super-bearish report last week. 

What started as a reaction to bearish report ended in a TECHNICAL BREAKDOWN as soon as WTI breached the key support of 60.06 & the price plummeted to 57 levels.

As suggested in the last update, selling pressure shall remain because of the technical breakdown as long as WTI remains below the key resistance region of 59.85-60.3.

Fundamentally, the refinery throughput should come back to normal [~17.5 mb/d] and exports should exceed imports & this should turn the storage from a build to a draw, thereby making it bullish.

Last but not the least is WTI's correlation to S&P. Whenever there is a breakdown, WTI tends to tag itself to S&P in a direct one to one correlation for the short term. S&P is very close to 2805, a key support, which if broken can open the trap door downward. 

In the short term, 59.85-60.3 key resistance, remains the gate between the bearish & the bullish set up.

Original post - 24th May 2019

Posted here - 25th May 2019

 

[WTI Update] 

Oil fell like a stone yesterday registering the largest daily decline this year.

 "Pure financial selling" & "Stop Loss triggers" below the key level of 60.06 is what we have gathered from sources & our ecosystem. Financial selling is basically taking some risk off the table with the current environment being uncertain, dollar index crossing a key resistance and SPX, staring at a potential sell off. Even a MINOR re-positioning from a large hedge fund shall bring huge volumes into the market & take out key levels. Once a key level is taken out, stop losses of thousands of traders trigger in a domino effect pushing the prices substantially lower.

Financial selling DOES NOT happen in one go. Such reorganization happens in small batches/installments over a period of time. This is because if one hedge fund decides to complete all selling/reorganizing in one day, the price drop shall create panic in other funds & a hedge fund domino effect can cause a major crash in the markets. That is the biggest advantage small traders have over large traders. Small traders can enter & exit whenever they want. Large players have to do it in small lots or it shall create panic around the world.

From a technical point of view, we had shared for the last many weeks that 60.06 remains the most important KEY support for the bullish micro-pattern to hold. As soon as 60.06 was taken out, the stop loss domino triggered taking WTI to 57 levels very quickly.

What Next ?

From a mid/long term perspective, both fundamentally & on larger technical macro-patterns, WTI remains in a bullish set up.  In the short term, since key supports have been broken, selling pressure shall continue to remain & $56-55 levels remain a possibility. 

For positional traders, the market shall offer some great dips during this correction to explore fresh positions.

For intraday/swing traders, it is best to trade around key resistances with tight SL on bounces until this selling pressure fades away. 59.8-60.3 is now a KEY RESISTANCE zone.

Yesterday's price action in WTI is another example of why trading only at KEY LEVELS with TIGHT SLs is the most effective & sustainable formula for small traders.

Get the trading technique right & learn to identify key levels and you will win most of the time.

More in the link : Trading Technique

Original post - 17th May 2019

Posted here - 18th May 2019

[WTI Update] WTI needs to impulsively break the 63.45-63.6 region fairly quickly. Failing to break it [one attempt already made] or hanging out around the region is not going to do any good and will only trigger a drop. 

Again, only a sustained break of 63.45-63.6 shall provide more traction to the bullish story.

.

Original post - 16th May 2019

Posted here - 16th May 2019

[WTI Update] WTI retraced exactly from 63.45-63.6 resistance region at 63.48. Since we remain in a bullish set up, a retest of 63.6 cannot be ruled out.

Original post - 16th May 2019

Posted here - 16th May 2019

[WTI Update] 61.98 is now a key support. This has now formed above the 60.65 & 60.06 previous key supports. As long as 61.98 holds, WTI shall head to 63.45-63.6. 

63.6 is also a CRITICAL key resistance and only a break of it shall provide strong bullish traction to WTI.

Original post - 13th May 2019

Posted here - 13th May 2019

 

[WTI Update] As anticipated, 63.27 has been reached. Longs from 60.65/61.05 should move SLs to lock gains.

Original post - 13th May 2019

Posted here - 13th May 2019

 

[WTI Update] Despite all the whipsaw on Friday & SPX also testing a new low, WTI remained resilient in a narrow range and held its nearest key support. This is an additional tailwind to the micro-bullish pattern we had suggested last week. 

As long as the key supports of 60.65 and 60.06 hold, WTI remains in a bullish set up for a test of 63.27 & higher.

 

Original post - 8th May 2019

Posted here - 13th May 2019


[WTI Update] As long as yesterday's support of 60.65 holds, we remain in a bullish micro-pattern which shall take WTI to 63.27 & 63.75 in extension. WTI had provided multiple tight SL entry point opportunities both yesterday near 60.65 and today near the local support of 61.05.

Any news flow on trade deal still remains a potential risk.

Original post - 3rd May 2019

Posted here - 3rd May 2019

[WTI Technical Map Evaluation]

Assessment of technical map - Projected on 26th April v/s Actual

Elliott Wave PROJECTED on 26th April

Wave A to end at 62.05                       
Wave B 
towards 64.6/65.2 in extn         
Wave C 
towards 61.78 or lower    
 

ACTUAL      

Wave A ended at 62.28
Wave B ended at 64.75

Currently in Wave C that has moved below 61.78

It is a good demonstration of how Elliott wave patterns along with Fibonacci projections play out quite well and consistently within a tolerance of a few pips.

 

Original post - 26th April 2019 

Posted here - 3rd May 2019

[WTI TECHNICAL MAP] WTI has traded in a $4 range this week. There were 4 potential trade opportunities shared through primary scenarios, 3 wins with approximately +250 points and 1 loss with approximately -40 points.

Important to understand where WTI is positioned from a technical point of view on a slightly larger time frame.

61.79 and 62.04 are very meaningful supports. While shorter time frame micro-patterns may get slightly modified with sudden short term bloodbath and volatility, the technical map remains intact as long as the larger time frame supports hold.

From a Elliott wave perspective, 66.6 has completed Wave 5 of the micro-pattern and has triggered wave A from 66.6

Once Wave A completes downward near a meaningful support, Wave B shall retrace a significant portion of wave A upward and hence 64.6/65.2 still remains technically feasible. 

Wave C shall then begin downward journey again below wave A to test a new support around 61.79 region or lower and COMPLETE THE MICRO-PATTERN.

From a trade strategy point of view, trades should be taken only near key resistances/supports with tight SLs and 1% rule.

Original post - 30th April 2019 

Posted here - 1st May 2019

 

Why is there always a difference between API and EIA crude inventory reports? As small traders, which one should we rely on ?

To understand this, let's use a simple example. 

Let's say ABC Company was assigned the task of collecting data on tax paid by 1000 individuals in a city. How will ABC approach this task?

ABC shall reach out to each individual, inform them about your credentials and this project, sign a confidentiality and privacy agreement if they agree, request them for the tax data.
It is clear that some of them in this 1000 shall not want to share any information with ABC despite ABC's efforts to convince them.

Now, at the end of your project, ABC needs to compare the data collected with the city tax office who also has this tax data for the 1000 individuals. The only difference is the city tax office has mandated these 1000 individuals to provide correct data. In a case of non-compliance or non--correctness of data, the city tax office has the authority to prosecute these individuals with civil & criminal penalties.

It is evident that the city tax office data shall always be accurate because of the strict regulation. On the other hand, the data with ABC shall be all over the place since the data collected by ABC is at will and not mandated as in the case of city tax office.

Now apply the same to Crude Inventory Data.

API  = American Petroleum Institute [ABC Company in the example]
EIA =  US Energy Information Agency [City Tax office in the example]

Both API and EIA reach out to the the same American companies that produce, refine and distribute petroleum products. However, EIA is a government body and has strict regulations and all companies are mandated to provide this data accurately or civil/criminal penalties can be imposed. On the other hand, API is "at will" data collection.

Hence API is an unreliable set of data & a lot of times has divergence to US EIA Inventory report.

Over the years, we have seen many new traders engaging themselves in trading both API and Inventory reports. During both report releases, Algos take over and introduce volatility to take out SLs on both sides. 

It is easy money for institutional algos with so many small retail traders all over the world more than willing to gamble on these reports.

Very important to know and learn about what you are trading. It is your hard earned money.

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” - Mark Twain

Original post - 29th April 2019 

Posted here - 1st May 2019

[Crude Fundamentals]

1. Policy divergence between US and Saudis

Beyond the CNBC, Bloomberg headliners which is what retail traders are constantly fed with, the deeper data shows that there is a significant policy divergence between the US and the Saudis that may become the reason for the next spike in crude prices. 

The US seems to be completely dependent on a flawed belief that the Saudis would come in immediately to fill in any supply gaps created by end of Iran waivers. The reality is Saudi's growing budget deficit in 2019 will lead to a desire for higher oil prices which shall only add more fuel to this fire of policy misalignment.

Additionally, our research sources also suggest that US did not take Saudis into confidence before blowing the trumpet on full Iran sanctions. While President Trump last week tweeted that he spoke to OPEC to increase oil flow, we have confirmation from multiple sources including a published article in WSJ that no such discussion ever took place.

https://www.wsj.com/articles/opec-saudi-officials-havent-spoken-with-trump-about-oil-prices-11556304536

With the end of Iran waivers, the perceived deficit could be about 300k b/day. Saudis seem to be not interested in doing anything proactively to fill this gap. We believe this policy divergence between the US and Saudi has a higher likelihood of creating a more bullish trajectory for Crude in 2019.

2. Non-Opec disappointments may also support the bullish theory

Canada, Mexico, Brazil, Norway - All Non-Opec producers have shown poor production numbers with more capex cuts on upstream. While IEA continues to show ridiculously bullish numbers for Brazil month on month, the actual data shows a completely opposite picture with Brazil struggling well below the forecasted numbers month on month. Refer Figure 1

3. Contradictions in IEA and EIA statements and data. Refer Figure 2 & 3

Plethora of irony and contradictions in the IEA and EIA statements which only adds further to the divergence in policies globally.

Where are the fundamental scenarios for Crude for the middle of the year and year end?

One ideal scenario is that there shall be zero supply disruptions from both OPEC and Non-OPEC countries. While this is a 'too good to be true' scenario, it still leads to a bullish outcome as US inventories shall continuously drain through the year end with exports from Saudi reaching very low levels since mid-term elections last year.

A more realistic scenario is with supply disruptions - Libya, Venezuela, Iran, Non-Opec etc, and this would require Saudi to react quickly. Saudis do not have any incentive whatsoever to react quickly.

Now combine 1, 2 & 3 and we have a perfect recipe for a global economic disaster. 

We believe Saudis might have just sowed the seeds for the next oil spike.

Original post - 25th April 2019 

Posted here - 25th April 2019

 

[WTI Update] As anticipated, the 66.25-66.4 resistance zone did hold and WTI reversed from this region. Any SHORT taken in this region is now up more than +100 points.

We have reached the target of 65.19.  Important to move SL to lock some gains

 

 

Original post - 25th April 2019 

Posted here - 25th April 2019

[WTI Update] Primary Scenario: 66.25-66.4 remains a key resistance zone and may see a potential pullback to 65.31-65.19 support zone.

Original post - 23rd April 2019 

Posted here - 23rd April 2019

[WTI Update]  So far, we have traded 2 LONG opportunities between yesterday & today, one from around 65.2 to 66.2 and another from 65.56 to 66.25, both with combined gains of +160 points.

Original post - 23rd April 2019 

Posted here - 23rd April 2019

[WTI Update] Longs from key support of 65.56 should look to book gains around 66.3-66.4 region. That's an additional +70 points for today.

Original post - 23rd April 2019 

Posted here - 23rd April 2019


[WTI Update] We are very close to the 65.7 zone. 65.56 is a key support.
SL should be right below 65.50 if long positions are being considered.

 

Original post - 23rd April 2019 

Posted here - 23rd April 2019

[WTI Update] Any Longs from yesterday should move SL to lock some gains. We are +70 points from yesterday's support zone.  66.2-66.4 resistance region shall be a good window to book gains on longs as there remains a possibility of retracement to 65.7 zone.

 

Original post - 22rd April 2019 

Posted here - 23rd April 2019


[WTI Update] The primary scenario is playing out well and did provide opportunities to enter the LONG trade close to the key support zone of 65.2.
Looks like WTI is set for an extension to 66.4 first.

Original post - 16th April 2019 

Posted here - 17th April 2019

[WTI Update]  64.35 is reached.  Any LONGS taken around the support levels of 63.07 are about +80-100 points in gains. Important to Lock/book gains in light of the volatility that may begin prior to the reports in the next few hours.

Original post - 16th April 2019 

Posted here - 17th April 2019

[WTI Update]  As anticipated, the key support for WTI was at 63.07 levels. WTI has been meandering near this key support region and has held the 63.07 region twice yesterday. As long as this region is held, the primary scenario remains for a rally to 64.35 and 65.2 in extension. 

Original post - 12th April 2019 

Posted here - 13th April 2019

[WTI Update]  WTI was rejected from the double top of 64.69/64.79 zone a few hours back and has seen a ~ +100 points retracement. In this downward journey, it has also broken a key support of 63.86 which may now set it up for a test of 63.07 again. If this break sustains, the next key supports are 63.32 followed by 63.07. Needless to say, important to lock gains.

Original post - 12th April 2019 

Posted here - 13th April 2019

[WTI Update]  Both 64.69 & 64.79 have previously formed a double top making it a strong resistance region which may result in a potential reversal. SHORTS may be considered if WTI approaches the Key Resistance region with SL right above it for a good risk/reward opportunity.

Avoid taking positions at random prices. Wait for the right Low Risk entry point near the Key Resistance. 

Original post - 8th April 2019 

Posted here - 9th April 2019

[WTI Update] [IMPORTANT] 

One of the reasons why we have been requesting members to avoid LONGS in WTI for a few days is in view of the Saudi Aramco $10 billion Bond Deal that is expected to close between today and tomorrow. Higher oil prices is a critical parameter for Saudis to make this deal attractive for potential bond buyers.

A number of very large funds who are managing this deal for Saudi Aramco would want to keep the oil prices higher until this deal is closed. The deal is being managed by some of the world's largest banks & funds - Goldman, Morgan Stanley, Citigroup, HSBC & NCB. 

The success of this deal is very critical for the deal managers to ensure Saudi Aramco signs them up as deal managers again when Saudi Aramco's potential $1.5 trillion IPO is launched. It shall generate massive revenues in the form of lucrative fees for them.

The deal might close in a couple of days. If the above theory is true, we may see a correction in oil prices after deal closure.

We will know in the next few days if this theory holds any water. It is important to however be aware and cautious with WTI & Brent Long positions for the next few days

Original post - 5th April 2019 

Posted here - 6th April 2019

 

Exclusive: Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC' - sources

https://www.reuters.com/article/us-saudi-usa-oil-exclusive/exclusive-saudi-arabia-threatens-to-ditch-dollar-oil-trades-to-stop-nopec-sources-idUSKCN1RH008

Simple explanation of the news article from yesterday and its impact on Oil Prices

 

NOPEC is a bill introduced in the US congress to get rid of OPEC cartel to ensure oil, gasoline, petrol, diesel etc are priced fairly around the world based on actual supply/demand. It is meant to support consumers around the world. 

NOPEC stands for No Oil Producing and Exporting Cartels Act. The bill will allow US to sue OPEC countries & its oil companies who work with OPEC under US anti-trust laws for creating a artificial supply crunch & increasing prices. This shall ultimately disrupt smooth functioning of OPEC as no company/country would want to be exposed to lawsuits from the US. If OPEC cooperation gets disrupted, all OPEC countries will supply oil to the maximum keeping their own interests in mind.

If everyone produces oil to their best capacity, oil prices would tank and this would adversely impact several world economies that depend on oil exports for their budgets.

How can NOPEC be challenged?

Since oil transactions around the world happen in USD, if Saudi being one of the world's largest producer, decides to sell its oil in another currency other than USD, then US will lose its negotiating power with the rest of the world since most countries would be trading oil in a different currency. 


It will destroy USD's standing as a global currency and US would not be able to impose sanctions on many nations. Most importantly, it will have a large negative impact on the US economy.

Saudi is threatening US with the potential consequences if NOPEC were to be made a law.

Overall, there is no immediate impact since NOPEC and Saudi threat balance each other. We will just have to closely track the developments in the future to understand any impact.

 

 

 

Original post - 5th April 2019 

Posted here - 5th April 2019

[WTI] 61.9 region support has held 4 times now. If this bounce sustains, it will first encounter the micro-pattern resistance at 63.15 followed by a macro-pattern resistance which is the 63.48-63.65 zone.

The reaction to 63.15 will be very telling and may result in deeper pullbacks.

 

Any longs from 61.9 should surely maintain their SL at cost and also lock gains.

 

Original post - 1st April 2019 

Posted here - 2nd April 2019

[WTI] - 59.75 is now the key support and as long as it holds, WTI may head towards 63.15

From a trading perspective, dips towards this key support may be used for LONG positions with a tight SL right below it.

60.5 is a local support

Please note that local supports are weaker than key supports, but can hold sometimes when the trend is strong.

 

Original post - 29th March 2019 

Posted here - 31st March 2019

[WTI] There has been a short bounce from the local support of 59.75. Now the local resistances which may stall this bounce are 60.35 and 60.53. If these hold, we shall retrace downward again towards the local supports.

Original post - 29th March 2019 

Posted here - 29th March 2019

[WTI] There was a small extension off the key resistance region of 60.38 beyond which the prices could not sustain resulting in a retracement downward. The local supports are 59.75/59.45/59.15 in the order of their strength. Key support is at 58.73.

Original post - 29th March 2019 

Posted here - 29th March 2019

[WTI] Looking purely from a technical point of view, ignoring & deflecting the noise around the Trump tweet, WTI seems to have strongly bounced of the key support of 58.17 which brings the focus back into the bullish set up for a test of 59.77 & 60.38 key resistance. 

Original post - 27th March 2019 

Posted here - 28th March 2019

[WTI] No high probability micro-pattern set up yet. Overall, WTI remains in a bullish set up with a short term bearish fundamental [Yesterday's inventory report]. 

Key resistance is 59.77 and 60.37

 

Key support is 58.82 and 58.17

Below 58.17, we transition back into a bearish set up.

Original post - 27th March 2019 

Posted here - 28th March 2019

[WTI] Inventory report was bearish. In the algo volatility, post the report, the key support zone of 59.42-59.35 got easily taken out. Now, WTI is attempting to climb back to this zone. False break outs are very common during inventory report volatility and only further price action for the next few hours shall help us identify a low risk set up. Until then, on the sidelines.
 

Original post - 27th March 2019 

Posted here - 28th March 2019

 

[WTI]  As anticipated the key support of 59.35 did hold and WTI bounced at 59.41. As we have mentioned in several updates earlier, local supports are always weaker than key supports. Also, a trade near the key supports/resistances always results in a massive risk-reward and is worth attempting. WTI is up by about ~+60 points.

The inventory report is due in about ~90 mins and it is important to move SL to cost/lock some gains/book all gains if a trade was taken around the 59.35 key support

 

 

Original post - 25th March 2019 

Posted here - 26th March 2019

Today's WTI trade was a perfect example of following the 5 simple rules that we had shared this morning.

It always results in large gains when the opportunity works out and very small loss in case it does not.

Entry was suggested at 59.1 with SL around it ~59.2. 
Gains were booked around 58.2. The risk-reward on this trade was 1 : 9. Gains ~+90 points

Even if 9 trades stopped out, 1 trade would make up the loss for the 9 trades.

That's the power of these 5 simple rules.

Original post - 25th March 2019 

Posted here - 26th March 2019

[WTI] We had shared an intraday SHORT opportunity in WTI at the key resistance of 59.1, a few hours ago. As anticipated, WTI stalled exactly at the resistance shared by us & reversed from there. The SHORT trade is now up by about ~+60 points. Important to move SL to cost or lock some gains. 58.28 remains critical support which if broken exposes 57 region.

 

 

Original post - 25th March 2019 

Posted here - 26th March 2019

[WTI] For the bullish set up to renew, WTI needs to break 2 key resistances, 59.1 & 59.6. A failed attempt to break 59.1 was made on Fri after the slightly bullish rigs report. Until both these key resistances break, a pullback to the 57 region is a doable scenario. 

On an intraday/swing basis, shorts may be attempted as WTI bounces and approaches the key resistance region of 59.1/59.6 with tight SL right above them.

A break above 59.6 shall resurrect the bullish set up.

 

Original post - 24th March 2019 

Posted here - 24th March 2019

 

[CRUDE Fundamentals] [In simple language]

1. OPEC Cuts :- Saudi has been leading from the front by cutting production much beyond what was agreed in the Feb meeting. In a nutshell, OPEC members need higher oil prices to balance their country's budgets.

2. Venezuela :- Production is dwindling rapidly due to internal political & economic crisis, US sanctions & major countries halting imports from Venezuela. 
Once a larger exporter at ~3 mbpd, Venezuela is now struggling to produce ~1 mbpd. The crisis has the potential to completely eliminate this supply from the global market.

3. Iran : - In our last post, we had shared the context of US mid-term elections that led to both over-extended exports from Saudi from Oct 18 - Dec 18 and waivers to 8 countries importing Iran oil. These waivers are set to expire in May 2019. Extending waivers shall be bearish for oil & vice versa.

4. US production :- US has recently for the first time in its history become a net exporter of oil. US producers are reaching record levels of 12.1 mbpd creating a large over supply, making US the global production leader followed by Russia & Saudi Arabia. 
That said, US has to deal with 2 head winds 
a) US producers break-even at a WTI rate of ~$55 
b) US produces light sweet crude only. It still needs heavy crude from the middle east since the US refineries are configured to process heavy crude only.
So, US exports its lighter crude version and relies on heavy crude from the middle east for its own consumption.

5. US-China trade deal :- US has been imposing Trump Tariffs on Chinese imports which is hurting China's demand. US & China together make about 41% of the world GDP & any demand squeeze has the potential to create a major turmoil in the global markets. Oil shall be in significant over supply if the global demand story is adversely impacted. 
Some announcement on US-China trade deal over the next 2-3 weeks is possible.

6. US Treasury Yield Curve :- The yield curve has been a great indicator of global slow down in the past. 
Yield curve, in simple words, is made up of short term/long term interest rates on debt instruments/bonds. 
In a normal economic growth scenario, short term has lower yields and long term higher in view of higher risks on account of limited visibility. When this reverses, that is, long term have lower yields than short term, it is called Yield curve inversion. 

Yield curve inversion is a reliable predictor of economic recession. Historically, it's prediction percentage has been 100%. That said, at least one quarter of data is required to confirm this. 

It is however VERY CRITICAL to note that the Yield curve inversion event did trigger on Friday creating concerns about potential slow down or economic recession.

Important to be aware of the fundamentals and its impact on WTI & other commodities/forex pairs/indices.

 

Original post - 21st March 2019 

Posted here - 23rd March 2019

 

[WTI] No change in WTI technicals. 59.2 -59.25 remains the KEY support. 59.7 region is still a LOCAL support.

The only factor that is keeping WTI lower is the sudden dollar upward movement in the last 3 hours. This is not sustainable.

Dollar has gained close to 0.75% in the last 3 hours alone which seems to be just a process of taking out all shorts that took positions immediately after the FOMC statement or press conference yesterday. The 'SHORTS' pushed the dollar down by 1% in a knee jerk reaction to the lower inflation forecasts by the US Fed. 

Today, all the shorts have been taken out. It is a similar story with Gold in the other direction.

This is very analogous to what happens during WTI inventory report release. The only difference between the two is that WTI volatility & whipsaw lasts a couple of hours, while FOMC lasts a few sessions.

Once this volatility subsides, there will be clear direction in all commodities, indices, forex pairs based on fundamentals and technicals.