The Weekly Update: Nymex Crude Oil Technical Structure

[indeed-social-media sm_list=’fb,tw,li,goo,xg’ sm_template=’ism_template_3′ sm_list_align=’horizontal’ sm_display_counts=’false’ sm_display_full_name=’true’ sm_disable_mobile=1 ]

Crude Oil Technical Analysis

Moderate selling was noted in crude oil since the end of June 2015. We have been observing crude oil on a daily basis, waiting for a technical opportunity to surface in the daily or weekly chart. Although the entry is not fully cemented it is inline with our protection for a weak US Dollar (USD). Although crude oil has its own fundamentals it is only traded against the US Dollar as opposed to other commodities such as gold.

Crude Oil Weekly Chart

Please click on the chart to enlarge:

Crude Oil Weekly Chart 16/08/15

Crude Oil Weekly Chart 16/08/15

Crude Oil 4hr Chart

Please click on the chart to enlarge:

Crude Oil 4hr Chart 16/08/15

Crude Oil 4hr Chart 16/08/15

The weekly chart shows a positive divergence has been confirmed in the Relative Strength Index (RSI). As you may have seen from our USDCAD trade alert the entry based on a positive divergence a weekly entry can often mean absorbing limited drawdown before the trend reverses in the predicted direction. Entries on a weekly chart are relatively strong and we are combining other times frames in an effort to increase the precision and limit the potential drawdown. We are therefore basing our entry on the 4hr chart, which supports the weekly chart.

The 4hr chart shows the established downtrend in crude oil. We are focusing on the selling that began on 5 August, 2015. Based on the positive divergence on the weekly chart we will wait to see whether 41.88 holds. Although the latter support is seen at approximately $41.00 we would prefer the $41.88 to support the weakness that may increase the potential of strong gains in the market. In a scenario where $41.88 is breached at the opening of the markets (22:00 GMT) the trade can still be taken but we must reconsider the location of the protective stop loss order.

If crude oil manages to gap below the lower support line we may require to revise our trading strategy as the 4hr chart may be inappropriate. The less optimal scenario is a gap higher. Although it may not invalidate our bullish projection for crude oil it may substantially increase the stop loss size and dent the Risk Ratio (RR) of the trade. This may require us to use the hourly chart should we wish to improve the RR and minimize the required stop that is demanded from the chart.

We are holding along trade in EURUSD and AUDUSD at the time of this writing. When the Forex market opens at 21:00 GMT we may look to shift our stop to the entry depending on the opening price of AUDUSD. If we will be unable to shift the stop in Aussie Dollar are uncertain if we will exercise our crude oil strategy as it will substantially increase our market exposure. Unlike FX pairs crude oil price movements can be extremely volatile. The target for crude oil long trade is $53.45, the potential stop loss order may be $2.00 or 200 cents but it is an early an estimation and is subject to change upon the opening of the commodities markets. Our target, $55.45 is unlikely to change.

Crude Oil Trade Alert Details

Crude oil long at market price ($42.08)
Take profit: 55.45
Protective stop: $39.90
Risk Ratio (RR): 1 : 6 (approx.)
Estimated duration: 42 days

19/08/15 UPDATE: We are aware crude oil selling were triggered by the EIA report. This is part of the range we mentioned earlier and does not negate the weekly chart at the time of this writing.

20/08/15 UPDATE: We are still struggling with our crude oil trade as the intraday downtrend on the 4hr chart has not been invalidated at the time of this writing. Based on our market experience we are looking for a single spike to reverse the intraday trend rather than continuous gains. What may trigger the spike are expectations (which currently do not exist) for the US congress to reject the deal with Iran. At the time of this writing there appears to be no majority to block the deal but the vote is only due in September.

21/08/15 UPDATE: Although we are at a safe distance from current levels we are preparing for the possibility of the market triggering the protective stop in crude oil.  If 40.50 gives way it will be a struggle for the price to correct higher.

21/08/15 UPDATE II: Crude oil is trading at  40.16 after taking out the key 40.50 support. There will be a battle around 40.10 and we hope the bulls will win. Crude oil has reached the objective of the monthly breakout that may leave room for profit liquidation.

21/08/15 UPDATE III:  Crude oil triggered the protective stop in our long trade, incurring a loss.

Please click on the chart to enlarge:

Crude Oil 4hr Chart 21/08/15

Crude Oil 4hr Chart 21/08/15

We have suspected this may be the case but were hoping the support levels that were protecting our stop would hold. At the time of this writing it appears we were taken out by a spike below the support, which is still holding at the time of this writing. We will consider an entry but not at current levels. We will provide an update to all traders that have signed for the global trade alerts plan.

30/08/15 UPDATE: Our decision to wait for the weekly close did not pay off. Crude oil reached the lower price we presented in the weekly chart and posted moderate gains following Saudi Arabia’s troops invading Yemen on Friday.

Please click on the chart:

Crude oil weekly chart 30/08/15

Crude oil weekly chart 30/08/15

We can no longer re-enter the market. We will wait for a new entry and consider our next step in crude oil.

The Weekly Update: Nymex Crude Oil Technical Structure

As crude oil long trade is closed this page can  now be accessed by all traders. Open trades are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
The Weekly Update: Nymex Crude Oil Technical Structure

MEMBERSHIP PLANS INTRADAY STRATEGIES TRADE ALERTS

The Weekly Update: Nymex Crude Oil Technical Structure

                                         The Weekly Update: Nymex Crude Oil Technical Structure
The Weekly Update: Nymex Crude Oil Technical Structure
                                             The Weekly Update: Nymex Crude Oil Technical Structure

The Weekly Update: Nymex Crude Oil Technical Structure