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james_gsx

Crude Oil March 20

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Looks pretty bullish to me. This dragonfly doji, or hammer (whatever) looks like some buyers came in around the $100 area which should now be support. I bought a few more calls this morning and I still think oil will retest the $110 area and eventually move higher. The lows of this hammer could still be tested, and it may not spring up next week - but I still think it's a bullish setup. Thoughts?

 

 

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I will admit, I got in a little early. I bought a little more on the pullback to $100 and the trade is starting to work out. The smaller bodies indicate a lack of selling to push through support, which was bullish. This goes to show that sometimes you get the candle and the trade doesn't happen immediately, you have to be patient and stick to your plan.

 

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I agree, I could have gotten in at a better price. I guess that's one thing I need to work on, I'm always afraid of missing the move. At least this time I acknowledged the move and bought at $100 again.

 

I wouldn't be surprised to see a small pullback tomorrow, but over the long term I believe CL is going to 125.

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I will admit, I got in a little early. I bought a little more on the pullback to $100 and the trade is starting to work out. The smaller bodies indicate a lack of selling to push through support, which was bullish. This goes to show that sometimes you get the candle and the trade doesn't happen immediately, you have to be patient and stick to your plan.

 

But what a minute James!! You did not identify which candle shape was being used here for your trade b/c a hammer is not equal to a spinning top which is not equal to a doji...

 

:confused:

 

Ok, sorry... Just can't believe what I am reading over in the VSA thread with 'CandleWhisper' thinking he already knows how unreliable candle patterns are. First we must start a poll here and play guess which pattern James used in this trade. Then, we can discuss the merit of the trade...

 

:doh:

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Frankly I don't care what the signal was, it's making me money. If we want to get bitchy about the candle and when I should have taken it, then we will simply look at price action alone. The fact stands, price hit support and found buyers thus moving price higher.

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Frankly I don't care what the signal was, it's making me money. If we want to get bitchy about the candle and when I should have taken it, then we will simply look at price action alone. The fact stands, price hit support and found buyers thus moving price higher.

 

Bingo - Price Action baby! The fact you chose a candlestick chart over bar chart over P&F the price action is clear. It hit a potential support area and reversed.

 

Nice trade! Did you enter on bar close with a stop below the wick? I have noticed (in index futures particularly) they will often poke through that price just to gun stops.

 

Cheers.

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But what a minute James!! You did not identify which candle shape was being used here for your trade b/c a hammer is not equal to a spinning top which is not equal to a doji...

 

 

Brown, so really you aren't using candles at all except as a method to portray price over time? Or is it just one knows or agrees on what they are called or what there characteristics are :) Tell us what you look for rather than just poking at the VSA guys (I'm pretty sure I know as it happens but it would be helpful to others I'm sure).

 

So really it boils down to the fact you find candles aesthetically more pleasing? Thats a genuine question btw.

 

Cheers.

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Also what is interesting is how Natural Gas, Heating Oil, and Crude Oil all produced similar candle patterns. I do not want to say exact since I did not run exact numbers, so I do not know if the upper shadow on one market was 1 tick higher than what is allowed. But IMHO, they all produced the same formation. However, it is interesting that only crude made it back to support. Since crude is the market we are trading in, I think it is ok that heating oil and nat gas didn't make it back to support. Since these other markets produced similar candle formations, it reinforces the crude oil trade. This is very simple analysis. No need for other stuff clogging up your screen. However, people confuse simple with easy. Not easy at all. It is hard to believe that simple analysis can work and is very powerful. I think that is why people come up with all these crazy ways of seeing the market.

 

Chart:

mwyum8.png

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Trader273 - I was looking at HO and NG as well before making the trade, and they did confirm for me. As with the CL trade, I'm exiting a small portion right now and the rest I will exit when price hits $110. I think CL is going to $125, but that's for another trade ;)

 

This was just a simple S/R trade with my entry based on candles. As I said, my stop would be to CLOSE below $100. I have noticed that CL will dip through lows etc during trading hours to blow out stops, just to retrace back above/below support/resistance. We did it several times before an actual close above $100. Once the close above $100 came, it all took off.

 

Edit: I got out of the April call, and now I'm just holding onto some longer term calls. I don't think price will scream to $110, and it looks like today is producing a spinning top, so we might pull back again. The reason for selling the April call was to lock in a small profit, and let the rest of the trade mature.

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As I said, my stop would be to CLOSE below $100.

 

Do you have, what I call, a catastrophe stop? Oil is a very volatile contract. I think it was up almost $5 yesterday, same thing can happen on the downside too.

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Frankly I don't care what the signal was, it's making me money. If we want to get bitchy about the candle and when I should have taken it, then we will simply look at price action alone. The fact stands, price hit support and found buyers thus moving price higher.

 

That was my point in the VSA thread but candlew feels like getting into a pissing match about what it was technically called. I apologize James if my humor was lost in this thread. Just tired of newbies saying something doesn't work when they obviously do not have a freakin clue...

 

You now get it - the name of the candle is IRRELEVANT. Remember when you first got into candles? Now look at your work here. WOW. That's all I can say. YOU GET IT. Many here do not and will not.

 

Brown, so really you aren't using candles at all except as a method to portray price over time? Or is it just one knows or agrees on what they are called or what there characteristics are :) Tell us what you look for rather than just poking at the VSA guys (I'm pretty sure I know as it happens but it would be helpful to others I'm sure).

 

So really it boils down to the fact you find candles aesthetically more pleasing? Thats a genuine question btw.

 

Cheers.

 

BF - excellent deductions as usual. ;)

 

I like candle charts b/c my eyes are trained on them. I know what to look for and while the book definition may call a pattern a spinning top, I just might call it a hammer. Oh well.

 

It's about what you see and the characteristics. You got it. I see a bullish looking candle at some support, high volume, etc. and I am going to consider going long there.

 

And from that point it's trade management as James_gsx is doing here.

 

PS

You going to play combat grounds this next round?

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At first today looked like it would be a doji which worried me, but price moved higher and closed above the ambush zone. So that looks bullish to me and I'm leaving my other options open until $110. Still might see a pullback before then, but that's my target for these remaining calls.

 

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One thing I do need to learn though is better risk management with options. I don't like buying naked calls all the time, and I would like to expand on that aspect of my business. Does anyone have any recommendations? I have read far too many options websites and they all say the same thing over and over, I guess I need more experience?

5aa70e4ca7958_cldailymarch27.jpg.be330d51ace0922ef6034c2e8dee3982.jpg

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No it does not look to pretty for longs right now. However, that monthly high, looks like 110 could become a very important level. I could see a test up to those highs, now what its going to do there is left to people with a crystal ball. So I would wait to see if they take up to test the highs or bring it back down to the previous support level.

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That was my point in the VSA thread but candlew feels like getting into a pissing match about what it was technically called. I apologize James if my humor was lost in this thread. Just tired of newbies saying something doesn't work when they obviously do not have a freakin clue...

 

Exactly.

 

If you actually read some of the ORIGINAL Japanese work (i.e. rather than relying on Steve Nison's interpretations of their work) they do emphasis it.

 

Candlesticks are very 'subtle'. They are designed to describe a scenario, to give more information as to what is going on.

 

They were NEVER designed to be used "separately" of each other. I.e. "this candle is hammer which means the market is definitely strong. Next candle is a doji which means the market is definitely in confusion" etc.

 

Personally, a concept I found interesting was "collapsing" the candles into each other. This was the Japanese way of (basically) seeing the higher-time frame pattern, from the same chart. I.e. collapsing 4-5 candles on a 1 minute, to see what it's looking like on a 5 minute.

 

It is a continued emphasis on group of candles, or patterns, and under emphasis on 'exact candle formation'.

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I have seen a few charts of "collapsed candles" but never really understood them.

 

As a newbie I would look at each specific candle on their own and trade off that - I failed big time. Now that's obviously starting to change as I learn how to look at the big picture. There was a nice dark cloud cover on the 5min today at resistance. Turned out to be an 8pt trade if you took it too.

 

Back to oil....

 

On the daily it looks like a descending triangle is forming. Not sure which way it will breakout. And for the weekly, I'm not sure how to read that candle. Strong volume, so would that mean price fell and buyers came in to bid it back up?

 

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Edited by james_gsx

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I took some profit off the table today, I have a small piece remaining to see if we hit $110. If we close above $110 I will most likely add onto my position with longer term calls as we will have a successful double bottom.

 

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