Oil Channel - If It's Not Broke...

4 Mar 2017

This is a my potential 8 week view of oil volatility. For a shorter term intra-week short entry, please see my 'Oil Supply - Continuous Chart', which provides a more detailed view of this charts short entry.

I have been (im)patiently waiting for a breakdown in oil prices and to see a higher weekly low created prior to prices rallying again. I believe this low will happen at the bottom of the daily channel at the 45.75-46.08 level. I feel that the break down is imminent as the FOMC meets on March 15 , rate hike sentiment is increasing and am expecting a clearer validation/retrace of the 46 level. Volume was enormous on the 11/30 daily candle so I do not expect prices to drop below that daily low.

On the upside, I've been looking for a 14 month cycle high to occur on the 4/17 week; so am looking for a top to occur between 4/17 and 4/24. This bottom and top would be in line with the 3/21 and 4/20 futures contract rollover dates. This seems like too large of a swing to realistically happen but looking at the past 16 months of swings it is clearly possible in this channel.

I am currently short and am advising short entries for this trade at current price 53.2 - 53.51, targeting 45.75-46.08 to the downside and 56.5-57.5 on the upside. 57.49 was a weekly inflection created on the original Dec 2014 leg down and it may be tested.

Short Entry (Currently Active): 53.2-53.51
TP1 (Long Entry): 45.75-46.08
TP2 (Short Entry: 56.5-57.5

Good Trading all!

4 Mar 2017

Catatan

Weekly explanation of 46 Low Target and 56.5-57.5 High Target

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4 Mar 2017

Catatan

View of 4/17-4/24 Weekly Cycle Top Projection

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9 Mar 2017

Catatan

Downside support chart/new short Entry level chart following today's large breakdown:

10 Mar 2017

Catatan

For next week, I will focus on today's weekly close. Much like pivots, the supply/demand levels that I mark represent buying/selling climaxes and these levels are very significant on a weekly chart. If prices break and close below a weekly inflection, it tells me that where buyers were previously absorbing supply, that they have given up and supply is now taking over. This is the case this week and a perfect example. The weekly candle has closed just below the 48.57 weekly inflection and this suggests that prices will now target the next low weekly inflection, which is at 45.99. This does not mean that prices will not go back above 48.57 or below 45.99, it just means that buyers at the 48.57 level have stopped buying at that level and deeper selling is now likely. Great job if you remained short this week, is was a rare play on monster volume.

For next week, I believe that 48.6-49.2will remain a selling level if prices see a brief rally and although risky at this point, I will be adding shorts on Monday's open at het current level looking for an early week move to the 47.7-48 level possibly seeing the 46 target reached by the 17'th/20th.

Good trading all!

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14 Mar 2017

Catatan

Prices are nearing the potential bottom target at the 46 level where I expect we will see a reversal between 45.6 and 46.1. Please refer to this chart for target prices to the upside; I will be closing partial long positions as each target is reached and look for lower entry levels to re-add the partial long positions.

Good trading all!