In my earlier posts, I did a couple of entries on crude oil and so far oil is behaving as expected (probably it won't after this entry). So, I thought I update you all about possible trades in this commodity.
This is a monthly chart. I think Netdania uses continuous futures data. It is too early to say anything about the candle. The important bit is the MACD which is turning down.
On a weekly chart below, major uptrendline was broken in August indicating the change of the major trend from bullish to bearish. You can also see how crude came back to test the trendline, kissed it goodbye and now seems to be accelerating to the downside. One interesting observation is that it made a flag (2 weeks), made a new high from the flag only to reverse. I like such failed flag patterns. They work well. In general any failed pattern works well since a lot of people are caught on the opposite side.
MACD is turning back down from zero level which is bearish. On the other hand, weekly RSI is about to test its 50 level; make or break here. My bet is that will pause first (small bounce) but then break below 50 level. Test of the second swing at $76.30 or the trendline aproximately at $80 is my main scenario.
Daily charts gives us even more clues. We have confirmed double top (Adam & Eve) with a minimum target of $87; broken 50 and 200 day moving averages (not shown) and a broken uptrendline (green line). Crude tested the uptrendline and was successfully rejected. MACD is accelerating down but Friday was a doji day which makes me think we might or even likely to test the bottom of the double top.
Trade 1:
If we have a bounce, then watch $95 to $95.80 for a short entry. This is where it should reverse. Also, pay attention at a daily RSI. It is turning up and it should get rejected at 50 level ($95 to $95.80 range) or just at the bottom of the circled zig-zag. First target is $90. Second target is $87 (double bottom minimum target). Third target is $80ish (weekly trendline on the 2nd chart) and the final target is $76.30 swing low. In general if crude closes below that weekly trendline at $80ish, then it is likely to fall way below $76.30.
This trade is off if it closes at or above $98 on a daily basis because we might be looking at a typical A-B-C consolidation formation before crude goes higher. Not my preferred scenario.
Trade 2:
If it is not going back up to test $95 area, then sell below the low of the last week. Targets above apply.
Trade 3:
$90,is a major support. You can see how price tested this area 5 times before. Herein lies the rationale for a short term (1 or max 2 days) counter-trend long trade with a tight stop loss.To time it better, you may need to go to 15min charts. I believe it will be a very high reward to risk trade.
Below is the 4h chart. You can see MACD appears in the process of crossing up while RSI is showing small bullish divergence. The last candle is inside candle. Breakout to the either side (up?) from highs/lows of the previous red candle will give a clue as to the short term direction. All this supports the daily doji.
Good luck.
P.S. One of earlier posts was on AUDCHF which closed above daily right angle triangle. The stop loss on this trade is at 0.9300 as per this post. But lately this trade is going nowhere and instead we have a a clear right angle falling triangle (bearish) on 4h chart. If it falls down out of it, a) then the daily breakout will turn out to be a fake, b) also, minimum downside target is 225 pips from 0.9312 but most probably it will fall to 0.8900. Therefore, I would put a reverse sell order at 0.9299.
This is a monthly chart. I think Netdania uses continuous futures data. It is too early to say anything about the candle. The important bit is the MACD which is turning down.
MACD is turning back down from zero level which is bearish. On the other hand, weekly RSI is about to test its 50 level; make or break here. My bet is that will pause first (small bounce) but then break below 50 level. Test of the second swing at $76.30 or the trendline aproximately at $80 is my main scenario.
If we have a bounce, then watch $95 to $95.80 for a short entry. This is where it should reverse. Also, pay attention at a daily RSI. It is turning up and it should get rejected at 50 level ($95 to $95.80 range) or just at the bottom of the circled zig-zag. First target is $90. Second target is $87 (double bottom minimum target). Third target is $80ish (weekly trendline on the 2nd chart) and the final target is $76.30 swing low. In general if crude closes below that weekly trendline at $80ish, then it is likely to fall way below $76.30.
This trade is off if it closes at or above $98 on a daily basis because we might be looking at a typical A-B-C consolidation formation before crude goes higher. Not my preferred scenario.
Trade 2:
If it is not going back up to test $95 area, then sell below the low of the last week. Targets above apply.
Trade 3:
$90,is a major support. You can see how price tested this area 5 times before. Herein lies the rationale for a short term (1 or max 2 days) counter-trend long trade with a tight stop loss.To time it better, you may need to go to 15min charts. I believe it will be a very high reward to risk trade.
Below is the 4h chart. You can see MACD appears in the process of crossing up while RSI is showing small bullish divergence. The last candle is inside candle. Breakout to the either side (up?) from highs/lows of the previous red candle will give a clue as to the short term direction. All this supports the daily doji.
P.S. One of earlier posts was on AUDCHF which closed above daily right angle triangle. The stop loss on this trade is at 0.9300 as per this post. But lately this trade is going nowhere and instead we have a a clear right angle falling triangle (bearish) on 4h chart. If it falls down out of it, a) then the daily breakout will turn out to be a fake, b) also, minimum downside target is 225 pips from 0.9312 but most probably it will fall to 0.8900. Therefore, I would put a reverse sell order at 0.9299.
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