OIL PRO WEEKLY, February 12-16, 2018

[Sive Morten]

Greeting, guys

Today I think, we could take a look at Crude Oil instead of gold market by two reasons. First is - we've covered gold market rather close on previous week, and overall analysis mostly stands the same. Besides, we will proceed looking at gold in our daily videos next week, as usual.

Second reason is good potential trading setup on crude oil. We very rare take a look at it, but, this is rather liquid market and most retail brokers let trade it.

So, don't be upset if you expect to get gold review - just on Tuesday we definitely will provide an update. In two words - gold stands at strong support and daily oversold area, as major FX currencies. Thus, here some upside action should happen. In fact, we already have traded our entry point on Thursday. Trade has started from 1308 level...

First, I will provide short fundamental background to you, so you could better understand what is going on in oil market...
Syria war in 2013-2016 put the starting point for process of separation this country. Simultaneously there are lot of parallel aims were made to achieve there. Everybody who took part in this process wanted to get the piece of pie. United States aimed to put control on major oil fields and make overall control even stronger. Not just because they need oil, but for using it in political sphere. Syria separation first and final destruction as independent country should let him press on Iran as it will be surrounded by US puppets - Saudi Arabia, Qatar, Israel, Iraq etc. This should be a question of time, when it will fall. Fargoing target is separation of Russia. By sending pipe of Qatar (and Syria) gas to EU and using their political power - they aimed to cut Russian gas sale to Europe and significantly reduce gas prices. This should make strong wound in Russian economy, hurt social sphere, healthcare and other. Significantly reduce wealth of population, diminish government programs etc. As a result this should prepare suitable background for different kind of unrest in population and separatist sentiment in some regions. All that US will need to do is to warm up and support this.
Other countries also had their own targets. Israel would like to expand their territory, got control on some hydrocarbon fields as well.

First step in 2013-2014 in this direction was sanctions and - dropping of crude oil prices. Drop was controlled and financed by two sources. First is OPEC controlled extraction and didn't reduce it, supporting price dropping. But major factor - wide stream of stolen Syrian oil was flow on "developed" markets. This bargain oil was stolen by ISIL terrorists, then sold, or better to say "washed" through Turkey and Israel ports and companies. As EU countries and US can't by oil from ISIL directly (interestingly why?), but buying stolen oil from Turkey and Israel - this is quite another tune right?
No - there was no shale oil revolution in US. This was just stolen oil from middle east. They just were needed to cover it somehow, jut to explain people why oil is dropping. As Russia was invited by official Syria government to resolve the problem and "intruded" in process - somehow shale oil revolution in US has started lagging and crude oil prices has rising up...
Now, as Middle East mostly stands under control of Turkey, Russia and Iran (Egypt, Lebanon, Yemen, Qatar are among supporters, and soon they should join this union) - prices has returned back to normal levels.
US has forgotten about their "Shale oil" revolution and starts to buy Russian liquid gas.

Now we know results of Syria war. US coalition was defeated and all plans of US, Israel &Co. were vanished. This has led to "normalization" of crude oil prices. Now 55-75 $ looks like comfortable price for everybody.
Currently there are no reasons to expect big changes on crude oil market and it should remain relatively stable. Besides, Mr. Putin will win elections in March and there will be another 6 years of stability (currently support rating stands above 80%).

Still, it doesn't cancel possible significant moves on crude oil market, which could be attractive for trading.

Short term picture mostly is driven by dollar's strength, some talking about oil storages in US and surprising ramp-up of the North Sea Forties Pipeline, which shut earlier in the week. Some talking also stand around growing US domestic production which could compensate OPEC&Russia contraction. But it seems that major factor still is a dollar, while there are always talks about oil reserves which doesn't make decisive impact.

COT Report

Recent CFTC data shows that net speculative position has started to decrease and in general, they stand at record levels. Also we see some divergence between Open Interest/price chart and net position. on ICE crude futures this difference even more notable:
Source: Reuters, CFTC

Here is ICE Crude chart:

This has prepared technical background for downward action on crude oil market. Short term sentiment mostly stands bearish, especially this could be seen on ICE chart, where net position is dropping for 6 consecutive week.

Technical
Monthly

Now you will understand why I offer you to take a look at crude oil. Trend on monthly chart of crude stands bullish and price is not at overbought, but upward action has a barrier right now - wide gap and strong monthly K-resistance area. This has triggered strong drop in February.

At the same time we see that major AB=CD target has not been met yet, as it stands around 75.50$. So, at least by technical reason, we could suggest that some another leg up should happen as soon as downside retracement will be over.

Weekly

Here trend has turned bearish, but not the trend is our particular attention. We have more valuable setup here. On coming week crude oil could form B&B "Buy" Setup. It just needs to reach 3/8 Fib support of 60.76$

At the same point we will get another DiNapoli direction pattern - bullish Stretch, which is combination of Fib level and daily oversold. Potential of this trade is rather significant and stands for ~ 5$.

Daily

Daily trend is bearish as well, crude oil shows miserable plunge down, very fast action. As a result, market stands deeply oversold. Around weekly 3/8 Fib level we also see natural consolidation that should provide additional support.

Also - 5/8 Fib resistance level will be potential minimal target of B&B trade. As we've said that monthly AB=CD has not been completed yet - we can't totally exclude an ultimate scenario, when B&B will become a continuation pattern right to completion point of 75.50$ target:

Intraday

Currently we do not have any signs of reversal yet on intraday charts. As downside action stands rather strong - attempt to anticipate reversal will be a suicide. We need to wait clear reversal patterns here. It seems that downside action will continue a bit more. Although you can see that oil has completed XOP of AB-CD pattern, but major 3/8 weekly support has not been reached.
So, it seems that we need to use A'B-CD large pattern which points that ultimate XOP stands at 60.36$. Also it coincides with WPS1. When this XOP will be reached - weekly level also will be tested. Then we just will need to get some bullish pattern around.
As you can see - not many tools we have here for analysis.

The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Good morning,

So, it seems that Crude oil is not very popular among our FPA visitors, so I even didn't get any "Like" for it
OK, then, let's turn back to gold

Now gold is forming good setup for scalp intraday trading. We expect that stock market will turn to upside retracement within 1-2 weeks. As US bonds yields returns back to highs - this will press on gold in short term.

On daily chart picture stands mostly the same. Here we've got DiNapoli "Stretch" pattern, but it is mostly done. May be later we will get some upside continuation, but it will be by some other reason probably:

Our Stretch trade was perfect. In today's video I explain some "advanced" moments of DiNapoli technique and why we've entered long when most traders thought that everything is "lost". Our entry point was perfect, precisely at 1307 XOP target, started by 30-min butterfly and right at our hidden 4-hour K-support area.

But, as you can see from above picture, market also has some technical reasons for retracement down. It comes to K-resistance area around 1330 and former neckline.

Hourly chart shows that AB-CD target has been completed, but it seems that gold could climb slightly higher and try to complete butterfly "Sell" before retracement will start. Let's see... This is trading plan for 1-2 sessions...

 

[Major_Tom]

Sive, your crude oil's analysis is very interesting!!! Thank you!!!

 

[Sive Morten]

Greeting, guys,

Right now we can't do much on gold as markets across the board are waiting for US inflation data later in the session. As you can undertsand inflation now is "rule them all" - major driving factor for all markets - FX, bonds, stocks, commodities.

Still, as on FX we suspect that another leg against USD should be, something of this kind could happen on gold market as well. Now, on daily chart price is coming to major 5/8 Fib resistance around 1243 and MACDP line. So our task here is watching for possible bearish grabber around major resistance:

While we're waiting for 1243, I will show you how I've traded our yesterday setup in red circle on 4-hour chart. This is a bounce down out from K-resistance area that we've discussed yesterday for scalp short trading:

Here is how it has happened. I've faded entry a bit against 1.27 butterfly "sell" pattern (I always fade entry/exit levels to avoid fill competion around precise levels). My stop was 50 pips (I have conservative risk management - not more than 1-1.5% of assets risk in every trade). Stop was above K-resistance 1229-1331, which was major part of our trading context.
Market has moved slightly against me but stuck inside K-area and formed a kind of H&S pattern. As soon as bearish reversal swing has been formed - I move stop to b/e. My exit was slightly above H&S XOP target (faded again).

Taking hindsight view - better entry was on H&S right shoulder. Price entry was alsmost the same as mine, but market already has formed bearish reversal swing by this moment and you have confirmation of started downside action and, hence, more confidence for short entry. Stop in this case would be closer - just above the head. But you never know in advance, how it will happen...

 

[Sive Morten]

Greetings everybody,

Today analysis for gold is very similar to EUR. Currently it is unclear still the reasons that pushed markets higher, against major inflation statistics. May be data has missed expectations, because US yields also has dropped...
Anyway, although we've got upside action that we've discussed, the background of this action is different. Definitely it doesn't correspond to bearish scenario. So, we have bearish grabber on daily, we have price at OB level, but - in current situation this is not enough for taking short position.
At the same time - it is not good idea to go long as well, as better to wait some retracement. That's being said, on daily chart nothing we could do right now:

On 4-hour chart market stands at minor 78.6% Fib level, as well as EUR and gold already has passed through COP and OP targets and broken all major Fib resistance levels. It means that chances to reach XOP around 1365 are not bad, but taking in consideration daily OB level, some relief should happen first.

That's being said, currently we could focus only on intraday setup. First, we suggest some minor retracement here, but later price could proceed to XOP target...

 

[Sive Morten]

Greetings everybody,

So due fundamental shifts in assessment of US economy perspectives and inflation pressure in particular - markets across the board are breaking previous scenarios in favor of USD and gold is not an exception.

Thus, recent rally has changed daily context to bullish. Right now is just not comfortable moment to go long as gold stands at daily OB. But as soon as retracement will happen - we will be watching for bullish chances here. Major aim right now is real breaking through previous tops...

In a shorter scale - we have intraday AB-CD pattern and its major XOP @ 1365. That's where market is going right now. Still, upside action is slow down because of daily OB pressure. Today OB stands at ~1359-1360. It means that market again could make small retracement as it was yesterday.
As soon as XOP will be met - more acceptable retracement could happen... this is what we will be watching for: