Crude Oil Candlestick Analysis

[trader273 10]

Candlestick analysis can be very powerful especially on longer time frames. One of the most powerful tools (IMHO) is the theory of change of polarity- old support becomes new resistance and old resistance becomes new support. I enclosed a weekly chart of Crude Oil. I did the analysis till about February 2006.

 

Current Analysis:

Should be long from hammer 4 bars back. Could be finding resistance at these current levels. There have already been two bull traps at these levels so I would tread lightly. I would take some profits if none have been taken yet. If we can get a new high with a CLOSE over the resistance that would be very bullish.

 

1) Bullish Engulfing of red spinning top engulfing the last ( at least 3 candles)

a. Low of Pattern becomes support

b. Reason for trade = no

 

2) Evening start

a. High of pattern becomes resistance

b. Reason for trade = no

 

3) Hammer at support of (1)

a. Reason for trade = yes because at support

b. What to watch

i. Resistance set by (2)

 

4) Dark Cloud Cover

a. High of Pattern becomes resistance

b. Reason for trade = no

 

5) Numerous Hammers/ piercing / spinning tops

a. At support set by (2) – change of polarity

b. Reason for trade = yes

c. What to watch

i. High of (4)

 

6) Shooting star

a. At resistance set by (4)

b. Reason for trade = yes

c. What to watch

i. Low of (5)

 

7) Dark Cloud Cover

a. Below resistance set by 4

b. Bulls took it above that level but failed to hold it above- classic bear trap

c. Reason for trade = yes for aggressive traders

d. What to watch:

i. Lows set by (5) and highs set by (2)

 

8) Shooting Star

a. At resistance set by (4) (7) and (6)

b. Reason for trade = yes if not already short on (7)

c. What to Watch

i. Lows set buy (5) and highs set by (2) and lows set by (1) and (3)

 

9) Hammer

a. At support set by (1) and (3)

b. Reason for trade = yes

c. What to Watch

i. Resistance set by (5)

 

10) Bearish Harami

a. High of Pattern is resistance

b. Reason for trade = no

 

11) Hammer

a. At new support set by (9)

b. Reason for trade= yes

c. What to watch

i. Resistance set by (10)

 

12) Spinning top

a. Confirming support set buy (1) (3) (9) and (11)

b. Reason for trade = yes ( if not long form (11)

c. What to watch

i. Resistance set by (10)

 

13) Shooting Star

a. At resistance set by (10)

b. Reason for trade = yes

c. What to watch

i. Support set buy (12)

 

14) Hammer

a. At support set by (10)

b. Reason for trade = yes

c. What to watch

i. Resistance set by (2) and (5)

 

15) Shooting Star

a. At resistance set by (7), (4), (6)â€â€bull trap #2

b. Reason for trade = yes

c. What to watch

i. Support set by (2) and (5)

 

16) Hammer

a. At support set buy (2) and (5)

b. Reason for trade = yes

c. What to watch

i. Resistance set by (4) and (6)

ii. Resistance set by (7) and (15)

[trader273 10]

Chart:

 

[james_gsx 16]

Nice analysis, it almost makes me want to go trade CL.

 

I view the first attempt definitelly as a bull trap. The second one looks more like a pullback after a massive rally. It traded back to the trendline and is now moving higher. Should be interesting to see what type of candle is produced after this week, I wish I followed crude more so I could add my own analysis.

[trader273 10]

We could turn this into a thread where people can post whatever markets they want, be it daily, weekly or monthly. Its good to bounce off ideas and try to learn from each other. So have at!

[james_gsx 16]

I did this last night, just a quick and simple analysis. I see a potential H&S pattern, and obviously support at $80. I know crude is very technical, but wouldn't $80 be a pyschological resistance level as well?

 

And what's the tick value for CL and QM? Like YM = $5 and ES = $12.50

[trader273 10]

Tick value for CL is $10 and it moves in .01. I think QM is $12.50/tick but moves in .25 increments. Plus since CL can be traded electronically the QM has really lost a lot of volume. CL can be a very quick market, often moving 3-5 levels at a time.

 

Here's my take on the weekly CL:

[trader273 10]

Heating oil and crude oil are correlated markets so maybe heating oil (HO- thats the ticker I'm not calling you a name:o) Heating oil broke out so far, but we'll have to wait to see if it can close over the resistance areas and see if it pulls crude with it.

 

[james_gsx 16]

Does CL have options that you can swing trade with less risk? Kind of like ES futures options?

[trader273 10]

Not sure, im sure its on the web somewhere.

[The Bear 10]

Does CL have options that you can swing trade with less risk? Kind of like ES futures options?

 

They have options that are pit traded. By now they may be electronic - maybe check it out and post back here. Symbol LO I think.

[The Bear 10]

I did this last night, just a quick and simple analysis. I see a potential H&S pattern, and obviously support at $80. I know crude is very technical, but wouldn't $80 be a pyschological resistance level as well?

 

And what's the tick value for CL and QM? Like YM = $5 and ES = $12.50

 

I think your potential target is realistic. This bull market isn't over yet in my opinion. Use QM and take the plunge.

[trader273 10]

I think your potential target is realistic. This bull market isn't over yet in my opinion. Use QM and take the plunge.

 

I'd be careful of buying right below resistance. Might be prudent to wait to see if the resistance holds. Of course, only my opinion.

[The Bear 10]

I'd be careful of buying right below resistance. Might be prudent to wait to see if the resistance holds. Of course, only my opinion.

 

For swings - sure I see your point too...but for intra-day i'm still taking all sorts of longs....at least up until today. Tommorow will be another world though - so watch closely.

[james_gsx 16]

I know there are some reports that are released regularly for CL. What are they and when are they released?

[trader273 10]

Crude oil inventory report.Released at 10:30 on Wednesday unless Monday was a holiday, then it gets pushed back to Thursday.

[trader273 10]

Oil is on fire today! ( well, metaphorically speaking- its not really on fire ) will is stay above these resistance levels is the question though? It appears the daily will close above, but we have seen in the past it was just the bear luring the bulls in. That is why I like the weekly charts. May take longer, but should give more quality signals.

[Guest cooter]

Crude oil inventory report.Released at 10:30 on Wednesday unless Monday was a holiday, then it gets pushed back to Thursday.

 

Don't forget about the EIA report on Thursdays at 10:30, for Natural Gas. For some reason, oil prices are often affected by the gas plays off this report.

 

It's definitely a time to step aside until the report is released.

[The Bear 10]

Oil is on fire today! ( well, metaphorically speaking- its not really on fire ) will is stay above these resistance levels is the question though? It appears the daily will close above, but we have seen in the past it was just the bear luring the bulls in. That is why I like the weekly charts. May take longer, but should give more quality signals.

 

True. This bull still has more juice. Todays action was pretty bullish in my opinion. It won't surprise me if we get a big pull back...but then march higher.

[james_gsx 16]

Alright so we had a pretty strong move above resistance. I wouldn't swing trade this, I'd wait for a pullback to either the 8 or 21 EMA. I guess we could see a pullback to the breakout which I would most likely buy depending on the circumstances at the time. Thats definitely what you call a bull market

[trader273 10]

If using a weekly chart there is still time for it to close below resistance. If it does that it will more than likely form a shooting star type line and a good short IMHO.

[james_gsx 16]

CL closed above resistance again and you can see it pretty clearly on the weekly chart. I'd still wait for a small pullback before jumping in.

[trader273 10]

Well it's the end of th week. Looking at the weekly crude chart is did close over that resistance level. But not by very much. An bigger upper shadow takes away from the bullishness a little.

 

Looking at the daily chart, two days ago it closed over the resistance level, and now the low of today is sitting right at is as support. IMO, we will have to wait and see how price reacts around here before putting on a position.

 

I think that $80 is a very psychological number. Combine that with the resistance levels we are seeing here and my gut is telling to watch the short side. However, waiting for the technicals to give me a clearer picture than my gut.

 

[The Bear 10]

Well it's the end of th week. Looking at the weekly crude chart is did close over that resistance level. But not by very much. An bigger upper shadow takes away from the bullishness a little.

 

Looking at the daily chart, two days ago it closed over the resistance level, and now the low of today is sitting right at is as support. IMO, we will have to wait and see how price reacts around here before putting on a position.

 

I think that $80 is a very psychological number. Combine that with the resistance levels we are seeing here and my gut is telling to watch the short side. However, waiting for the technicals to give me a clearer picture than my gut.

 

 

I was shorting oil & gas on Friday, and I'm banking on more shorting in the near-term. Next week i'll be ready to catch the falling knife. Some refineries are down for maintenance next week so we'll see if that could give it a nudge.

[trader273 10]

We will have to see how this week plays out. Right now its looking an awful like the reversal around July. Big green bar up through resistance. Then a dark cloud cover forming the following week closing below resistance. If this week plays out like that I would look for a move to the downside to about the 68-70 level. (low of the hammer, and also previous resistance and support level. But patience is the key here, if taking a long-term approach. I don't use any of this analysis when day trading though. One can make money shorting oil on an intra-day basis even though the daily is in an uptrend. I don't want to bias myself to one direction on an intra-day basis.

[Sparrow 10]

The seasonal characteristics of oil are in favor of a pullback until nov-dec unless there is a very strong bull market.

Fundamentally it's really hard to tell at the moment, there's an abundant supply of crude but heating oil and gas stockpiles are low. Hurricane season and some front page articles on cnn might provide enough strength for the big boys to unload their longs.

In the last COT report longs and shorts were about balanced, with 30,000 more shorts.

I'm short at 80, maybe there'll be one more rally to suck in some late longs.

68-70 would be just to good to be true for me, but we'll see how this thing will play out.