CL Analysis for coming week

Good morning – I hope everyone is enjoying their weekend.

Since I’ve been trading the crude oil futures a lot more these days, I wanted to share my thoughts on the longer term charts and some scenarios on how it might trade next week  I will start with the Daily chart:

The daily shows a very obvious tight range/consolidation since early October between 79-84.  The bounce off 38% Fib retracement shown on the chart is bullish and sets up a bull flag scenario with prices approaching 84-86, and eventual resistance in the 90-92 area.

Should it fail to breakout higher from this range, I would look for the 50% and 61.8% Fib levels to be tested, and if these do not hold, I would look for support in the 67-69 range.

Now, let’s look at the hourly chart below:

The tight range channel can be clearly seen here as well and the unexpected move late on Friday afternoon (on volume, I might add), brought the price right back to the top of the channel.

I believe this sets up a move above this channel and back to the 84 area in the very short term, but it all depends on the reaction of the markets to the G20 meetings this weekend.  Where it goes and how it reacts at the 84-85 level will determine the outlook for the next few weeks.

In any case, as I have written many times on this site, I am not in the business of predicting where prices will go on Monday or Wednesday next week or any time in the future.  I merely follow price action, understand where my support and resistance areas are, and take the high probability (and lower risk) trades.  Analyzing the chart setup helps me plan my actions and my trades during the week.  But I will not hesitate to change my bias at any given time should the chart show any significant changes.

I hope this helps.

Good luck and good trading next week

Anatomy of an Intraday Chart of CL (Revisited)

I wanted to follow up on the post from this morning regarding CL December futures 5 min intraday chart.  Below is an updated end-of-day chart:

Points 1-6 were discussed in the previous post.  However, on point 6, the support zone has moved since the chart was in an uptrend all afternoon.

7. 7a and 7b show the price touching the support area around 80.60 with the occurrence of a divergence on the MACD.  A bounce from here would give very good odds for a long entry, which is exactly what happened.

8. Minor resistance area was taken out around 81.30.

9. Major resistance area was taken out around 81.60 and price continued to 82.10.

Strange action so late on a Friday afternoon for CL, but it is what is. All we can do perform the analysis and make real time decisions on what we see.

We’ll see what Monday morning brings.

Good trading.

Anatomy of an Intraday Chart of CL

Good morning.

I wanted to post and analyze a 5 minute chart of the CL Crude December futures.  Earlier, I talked about rising trendline, breakout, false breakout, etc. and wanted to share what exactly I was looking at.  Below is a 5 minute chart of CL:

There are 6 areas I’d like to focus on:

1. This is a horizontal trendline at 81.60, which also coincided with a major resistance area.  Usually at 9AM EST, there is a heavy move in one direction, and the thought process was if it breaks this level on some volume, it would breakout.  Which it did.
2. After the breakout, the next candle formed a Doji right on minor resistance at around 81.75.  At that point, some profit was taken and stops moved to breakeven.  Subsequently, the next candle dropped the price right back below 81.50 and the initial breakout/resistance area, signaling a false breakout.
3. Shows the rising trendline Tweeted about, going back from around 3AM EST.  As soon as it closed below it after 9:30AM, it moved lower to the first support area of around 80.90-81, where it has bounced briefly.
4. Shows the are of minor support at 80.90-81.00.
5. Shows the next area of support at 80.50-80.60.
6. Shows the next area of support at 79.35-79.50.  This area is a major magnet should CL decide to break below 80.50.

I hope this was educational.  Whatever indicators you use in your trading, on whatever timeframe, introducing and using trendlines and support/resistance zones will greatly enhance your trading, not to mention money management techniques (knowing where take profits, etc.).

Please do not hesitate to drop me a comment or tweet if you have any questions.

Good trading.