Crude Oil March 20

[trader273 10]

Not a bad trade. Heating oil had the same kind of price action. One thing to watch here is that HO has not gotten above the most recent resistance level. It has the potential to hold up CL.

[trader273 10]

Beautiful trade. Anyone wanna argue if the volume on bar 3 was greater than that of bar 2 but not greater then that of bar 5?? yeah, didn't think so. Keep it simple is the name of this game.

[brownsfan019 17]

  trader273 said:

Beautiful trade. Anyone wanna argue if the volume on bar 3 was greater than that of bar 2 but not greater then that of bar 5?? yeah, didn't think so. Keep it simple is the name of this game.

 

:applaud:

 

That's how we roll in the CC baby.

 

:did I say that?:

[trader273 10]

Well I said earlier that if these new highs were rejected I would be looking for a short, and here we are:

Heating oil also developed the same type of price action:

And Natural Gas also showed the same:

I think that all the markets are showing that the new highs, as of right now, are not sustainable.

[james_gsx 16]

I agree 100% I definitely think we'll test $108 if not $105-$106. I think retracing back to $100 would be unlikely, but I wouldn't be surprised considering how volatile CL is. I am glad we are involving heating oil and natural gas. Is there any way to pull up charts for gasoline?

 

Anyway, heres my take...

 

 

 

 

 

[trader273 10]

James,

Do you use those moving averages for trade ideas? I used to use (read: attempt to use ) moving averages but could never get profitable with them.

[james_gsx 16]

It really depends on the market and how it's acting. For example last summer it was really easy to use the 8 and 21 EMA for the YM. I could simply (I stole this from John Carter) buy on pullbacks to the 8 EMA. CL you could do with pullbacks to the 8 and 21. But now they almost seem irrelevant since both the YM and CL seem to range more than trend.

 

The 50 and 100 EMA were plotted for the YM and ES, but since I use the same chart for all daily time frames it shows up on the CL chart as well. They work well for support and resistance levels as you can see on the ES. For the CL I guess you could say they are just there as they haven't been needed lately. Although the 50 did provide great support.

 

But on a normal trending market, yes I would use them. Just like any "indicator" though, they are more of a guide.

[james_gsx 16]

Looks like that short is working out well. If the low of the spinning top from yesterday was broken you could think of a possible short to the 8 EMA.

 

[james_gsx 16]

Looks like a descending triangle is forming on the 30min chart. The $109 region is holding well. The daily looks bearish if we break that support level, yet the 30 min looks like we could get a nice bounce if we close above $110. Time will tell of course.

 

[trader273 10]

CL had an uneventful day. Not much movement and unable to take out yesterday's low. Heating oil and Nat Gas took out the lows, so I would suspect that monday the low will be taken out on CL. till then...

[james_gsx 16]

Natty gas looks very bullish to me on the weekly. Once this resistance is broken I think it will explode to the upside. The volume accumulation is a bullish sign. I just need a way to play this move, since I don't know of any ETF's that underly NG. I could always figure out how to do a strategy on the options underlying NG I guess.

 

 

 

Anyways here are the other energy markets. I think we will see a breakout very soon in all three.

 

 

 

 

[trader273 10]

  james_gsx said:

Natty gas looks very bullish to me on the weekly.

 

[james_gsx 16]

The way the candles show, we should see a pullback to the trend line for the current ascending triangle. I would not buy anything until a close above resistance, obviously. We have not got that yet, so I sit on my hands waiting for the breakout. If the breakout never happens then it never happens, but if it does I will be ready.

 

The bullishness is based on the weekly chart that goes back to early 2006, so it is a longer term play. The trade will not fire off until a successful close above resistance with strong volume (to show real money behind the move). The biggest reason I believe the breakout could occur and we could see a substantial move in price is due to the volume on the weekly. If one were to look back at previous attempts at our current resistance they would notice a lack of volume, it's the exact opposite here.

[trader273 10]

  james_gsx said:

The trade will not fire off until a successful close above resistance with strong volume (to show real money behind the move).

 

So you are just looking for a close over resistance, not a candle pattern to confirm, correct? If that is the case, then I can see your bullishness. I personally wouldn't just buy if/when it closes over resistance, I would wait for a retest of that resistance, which would then be support, and candle pattern. If you look back, you can see some head fakes.

Edited April 14, 2008 by trader273

[james_gsx 16]

You bring up a very good point, and it might be worth waiting for the pullback. From what I've seen with the energy markets that happens quite frequently, and the initial breakout is usually very volatile - and would most likely result in getting a bad entry. If I wait for the pullback it result in a more favorable risk/reward.

[trader273 10]

Also, I think you have Nison's books. Do you remember reading about "crack and snap" and "Falling off the roof"?. If not, take a look. He talks about how to play these kinds of head fakes.

[trader273 10]

Looks like it got over the highs. I guess this just shows how different entry methods have different outcomes. Getting in at the close will give you a better price, but more stops outs. Since we are going against the trend, I wait for confirmation. Now we have to wait and see if this move above the highs is a true move or a head fake. If its a true move I will wait for a test of this new support, if its a head fake I will be looking for a pattern to sell.

 

Also, something interesting to note is that neither Heating Oil or Natural Gas has taken out the highs. They might do it in the next couple days, but just something else to watch to try and put the pieces of puzzle together.

Edited April 16, 2008 by trader273

[james_gsx 16]

Natty gas took out those highs. I put up my next target level. Sort of disappointed that I sold my calls in CL, but there will be another opportunity.

 

 

[james_gsx 16]

CL could be setting up for a nice short on the weekly. The daily has shown some weakness and inability to break out $120. The double bottom from $100 would be complete at $120 as well. With today's rally it's a better risk/reward. One could argue that the entry was a few days ago, but from a weekly standpoint I still think this could be a good entry. Obviously the stop would be a close above $120.

 

Thoughts?

 

 

[james_gsx 16]

I love talking to myself

 

Anyways, we had a doji at $120 and the short position was confirmed. I covered to day at the 21 EMA. The original plan was to cover at the low of last weeks spinning top, but since we closed below the 8 EMA yesterday I thought I would wait to see if the 21 EMA was tested - and it was.

 

[trader273 10]

Hasnt been much action in this thread, so here's my take.

 

*At the time of this post there was still about 45 min in the pit trading hours for oil. I made the assumption that not much would change.