Crude Oil - a new journey

This is a discussion on Crude Oil - a new journey within the Commodities & Money Markets forums, part of the Markets category; Having decided to move from forex trading to Crude Oil, I felt the need for somewhere to write some stuff ...

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Old Jun 30, 2017, 2:28pm   #1
 
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Crude Oil - a new journey

Having decided to move from forex trading to Crude Oil, I felt the need for somewhere to write some stuff as I go.

I'm looking to trade 4H/1H timeframes with one eye on a daily overview and the other on 15m entry/exit refinements. Since that makes me not so prettily crosseyed I don't suggest anyone take me too seriously here!

I am trading technicals but I also want to write about the industry as a whole including who's who, countries, companies, technical info, shipping, environmental issues and so on - whatever comes to mind as I go. I just find this stuff fascinating as well as educational....I understand that for others it is just very boring.

I don't know where I am going with this but feel free to join in wherever if interested - just don't take my trading views too seriously - at least, not yet! haha!
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Old Jun 30, 2017, 5:13pm   #2
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It sounds like an interesting project Pipstream, but what was it specifically that prompted your move out of forex?
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Old Jun 30, 2017, 6:40pm   #3
 
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It sounds like an interesting project Pipstream, but what was it specifically that prompted your move out of forex?
My forex trading has normally focused on the USD/GBP/EUR triangle and I am finding each of those rather negative and depressing nowadays.

Brexit is a thoroughly depressing and sad situation although I am sure the UK will come out of it ok in the end. The future of the EU and Euro without the UK is also a sad situation and how the balance of power and funding within the remaining EU will develop is again uncertain.....and the US? Well personally I find the new regime very negative and depressing. I do not like isolationism and I do not like reading the sort of personal comments that are coming from the top there. Although, again, I am sure the US is going to grow stronger as time goes by.

So having to try and maintain a positive interest in the EU, UK and US at present is too great a challenge and I want something different that is concrete and interesting.

I have a few friends who trade crude and that encouraged me to give it a go.

The difference is that crude encompasses the entire globe and raises issues from the US Permian basin to Venezeula, from the middle East to China, from Nth Africa to Canada, from Russia to Alaska/Canada....and a lot of offshore areas in between.

But at the same time it is one commodity (well, kind of).

Now seems an interesting time to start as we have just completed a long bear run and bounced strongly off the lows and we are starting a new month next week.

Right now the question is whether this rally is sustainable much further above these levels. Seems the turn was caused by suspicion that at those low levels US production might start to turn off and thus aid OPECs aim to reduce global inventories. But whether that justifies a rise of more than a few dollars per barrel remains to be seen.

In other words, is this rally mainly short-covering or fresh buying. I've been long but not any more into the weekend. Slowly does it!

BTW, Tomorton, have you really been here for 15 years? That is amazing! I am truly impressed! You must have seen a lot of things here in your time!

Last edited by Pipstream; Jun 30, 2017 at 6:44pm. Reason: Added last sentence
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Old Jun 30, 2017, 7:10pm   #4
 
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Pipstream started this thread This is my basic chart. Just a couple of MA's and an RSI. An extremely common set-up. But I trade on a discretionary basis rather than mechanically obeying crossovers. I don't believe in MA crossovers that blindly!
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Old Jun 30, 2017, 8:35pm   #5
 
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Pipstream started this thread Closing the week on a high note after today's Baker Hughes US rig count showed the first decline, albeit only a couple of rigs, in 23 weeks.

This comes on top of the EIA weekly figures last Wednesday showing a fall in US oil production by some 100,000 bpd.

Combined, these are sufficient to encourage shortcovering in spite of increased production elsewhere such as Libya.

Its the weekend and Monday is surely a quiet day ahead of US holidays and its the month end - all good reasons to cover speculative shorts. But will the bull move continue after Tuesday? And if so, why!

Happy weekend!
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Old Jun 30, 2017, 10:12pm   #6
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Blimey Pipstream, I had not conceived that the geo-political situations across the EU, UK and US would have had such an individual impact.

In fact on many levels I can't really understand what you're saying. To me these things are just numbers and price charts and candlesticks. I don't think of real people and societies when I look at forex pair price charts.

But, I have to appreciate what you're so open and honest to say. Which is to say, that if these things are really having such an impact on you, the most rational thing to do, the only rational thing to do, in response is indeed to get out until it all calms down.

There's no doubting the oil market will give an interesting ride thatis for sure. Good luck with it.
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Old Jul 1, 2017, 7:48am   #7
 
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Blimey Pipstream, I had not conceived that the geo-political situations across the EU, UK and US would have had such an individual impact..
Well, you did ask! Seeing as its the weekend, I'll expand on this issue some more. It is always good to reflect on why we are doing things and thanks for raising the issue!

I think the disillusion started to set in with the salvaging of Greece and the suspicions of "creative" accounting from many southern European nations. That was followed by the refugee crises and the reluctance of EU countries to find a joint and fair solution to it. Then the UK bails out. I am very pro Europe on all levels and love travelling around it. But if we are to have an EU and a Euro then Europe either has to integrate or disintegrate, and the latter is so negative!

Equally, the US used to be a fascinating and powerful nation, but when headlines become more concerned with the implications of small hands and petty, childish tweetings than one can only become totally distanced from it.

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In fact on many levels I can't really understand what you're saying. To me these things are just numbers and price charts and candlesticks. I don't think of real people and societies when I look at forex pair price charts..
I understand that. It is good that we are all wired differently. But we all make our choices. First there is the choice of whether to trade or not. Many people I speak to have no conception of what trading is, and others have no interest in it whatsoever, and others are totally horrified at the thought of risking losing money in order to maybe make some.

Then we decide what to trade. Nobody trades everything, so how do we decide what to trade? I guess for most people the deciding factors are embedded in the criteria for trading in the first place: volatility, liquidity, tight spreads, etc. For many (most?) the only objective is to make money. But I guess we all have to have at least some interest in the underlying commodity/product/security as well?

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But, I have to appreciate what you're so open and honest to say. Which is to say, that if these things are really having such an impact on you, the most rational thing to do, the only rational thing to do, in response is indeed to get out until it all calms down..
I see trading as a skill which we then apply to a selected product or products. For example, a musician can play any kind of music but will always have a favourite that "speaks" to them personally. A person who enjoys playing live jazz in a club will not be so content as a session musician recording film theme music.

And a car restorer could rebuild almost any model but would always choose one that they felt a passion for.

I also need to feel the passion for my underlying market otherwise the charts are dry and meaningless. I do not trade fundamentals, I just trade what the majority is doing as revealed through my charts, but I want to also know why they are doing it and feel inspired by it and learning and growing from it.

Perhaps nothing focuses the mind more on a topic than having an open financial exposure to it, and that is the kick in trading. But surely it is better that the topic is positive and inspiring than negative and depressing!

But, like I said, we are all different. I cannot think of anything less attractive or more boring than trading cryptocurrencies that are totally characterless, but others love them

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There's no doubting the oil market will give an interesting ride thatis for sure. Good luck with it.
Thanks! Yes, it is not one for the faint-hearted or trainee trader. Its potential is enormous and so are the risks. On the other hand, it is more logical and consistent and, in my opinion, TA friendly than many currency pairs.
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Old Jul 2, 2017, 9:02am   #8
 
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Pipstream started this thread Last week was a firm, consistent upward move which, in my opinion, was generated by two things:

1) The week produced first signs that prices approaching USD 42 per barrel are starting to edge below the breakeven level for many conventional and even some US shale oil producers. The EIA figures on Wednesday revealed a slight drop in US weekly production and the Baker Hughes US rig count on Friday evening showed the first drop in 23 weeks - albeit only by 2 rigs.

2) The market was apparently already heavily short and the above -mentioned data prompted short-covering/profit-taking ahead of an exceptionally long weekend with the US Independence Day holiday on Tues 4th July (preceded by Canada Day on Mon 3rd).

But the question is will the upside be further extended beyond Tuesday?

The core fundamental issue is still the global excess in crude oil stocks and that has not changed. The OPEC production cuts are still being largely neutralised by increased production elsewhere in, for example, the US, Libya and Nigeria. Also, on the demand side, projections are being lowered across the globe by many analysts.

So, I think last week's upmove was more a bounce off the bottom than a start of a bull move. Further price increases will induce further production increases which, unless OPEC decides to deepen the level of production cuts, will again cap prices as producers start to lock in levels.

The Daily chart below is NOT a trading chart. It is just a collection of major indicators that are variously used by traders which helps to put a broader picture on where we are - from the bottom upwards as follows:

a) RSI is neutral
b) Momentum has just turned bullish
c) We are still under the 50% Fib retracement of the last move (at around 47.00)
d) We are still under the Ichimoku cloud
e) We are still under the 200SMA

I would expect to see Monday as a quiet trading day with a range held by roughly 45.75 - 47.00.

The rest of the week will probably depend on the EIA release on Thursday, after the holiday, as this was catalytic in the rebound last week and US production is perhaps the most sensitive issue around at the moment.
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