Is Crude due a small pullback?

[lurkerlurker]

From the way I am reading the chart, if today has no follow through north we'll see a pullback of $5 or so. We have tested this resistance a few times now, and on wide ranging bars with a lack of follow through the following day price is rejected. We may also be forming a bearish wedge. We made new intra day highs, however we could not close at a new high. Further, I didn't see $100 print on the electronic contract, which to me indicates that a floor trader purposely paid too much for a contract in order to trigger the $100 print.* This just seems a little fishy to me.

I'm aware that the USD is weak and political tensions are contributing to higher oil prices. However, I'm pretty sure a lot of this is speculative excess and there will be a shakeout move down to stop out those who bought near $100, before we take off again from support somewhere around $95.

Inventories tomorrow might just spark the move one way or another. My plan is to wait and see how the market reacts to the news. If we break $100.50 on volume with decent momentum and close near the highs, I'll consider if it is a valid breakout. Otherwise, if we have a spike up on the figure I'll be looking to short the first sign of weakness. If we have a spike down, and substantial buying does not come in very very quickly indeed I'll also consider a short position.


* -either that, or I don't know enough about the futures markets. Surely if the electronic high was 99.85 or so it would be better buying there than paying $150 per contract extra. Unless this guy was doing some serious size and preferred to use the pit - even then as far as I am aware the pit and electronic contracts are fungible, so why would the pit front month be trading 15c higher than the electronic? Could someone who knows what they are talking about please explain why there was a $100 print reported from the floor which was not mirrored on the electronic platform? Did someone pay too much on purpose to make news?

 

[lurkerlurker]

Looks like I was right about the rejection of $100 and the pullback to $95. Price is now testing the steeper uptrendline...

Did anyone take shorts near $100, and did anyone actually read my post?

 

[trader_dante]

Looks like I was right about the rejection of $100 and the pullback to $95. Price is now testing the steeper uptrendline...

Did anyone take shorts near $100, and did anyone actually read my post?

Spot on.

A $5 drop.

And no one even comments...

Good analysis Tom

 

[usman88]

I personally think crude will be at $92 before it will touch $100. I am also pretty sure we will see a startup in inventories from this wednesday or next one when the effects of 'tax savings' are removed and as weather improves in the shipping channels. Not to mention above normal temperatures in the US, apparent recession in the US economy and continuously reducing backwardation in the contracts.
on technical grounds people say a triple top has been formed

 

[usman88]

I think that a close around $94.50 today definitly signals $92 within the next 1-2 days. Close will signal the market sentiment and ill adjust accordingly

 

[laptop1]

Spot on.

A $5 drop.

And no one even comments...

Good analysis Tom

All depeneds on your time frame, if you are trading short term great call. However, if you trading long term, $5 is noise. But great for trading short term.

 

[tune]

...and did anyone actually read my post?

Yes. And the action today had much in common. A quick push into the Resistance and then down.

 

[lurkerlurker]

I personally think crude will be at $92 before it will touch $100. I am also pretty sure we will see a startup in inventories from this wednesday or next one when the effects of 'tax savings' are removed and as weather improves in the shipping channels. Not to mention above normal temperatures in the US, apparent recession in the US economy and continuously reducing backwardation in the contracts.

Recession in the US is keeping the dollar weak. There are other large consumers of oil besides the US and I think a weaker dollar could support prices. However, I agree with your post. Also, the USD is beginning to recover against some of the majors...I think most of the slowdown and rate cuts are already priced in.

I've not actually considered analysing backwardation in the contracts...thank goodness I don't really trade this market, and when I do I only really use price action.

on technical grounds people say a triple top has been formed

Yes. However, the second part of your post seemed so bland compared to the first. Almost an afterthought.

Do you have a view of any correlation between the fundamental and technical aspects of this market and the volatility immediately following the inventories? It would be useful to analyse volatility in the subsequent 15M, 4H, and 1D after the figures are released.

Do you remember if the swings were less dramatic when the supply/disappearance wasn't so stretched, and there was less speculative activity? Is the volatility after the inventories likely to die down in the future?

 

[lurkerlurker]

Yes. And the action today had much in common. A quick push into the Resistance and then down.

Am I correct in thinking that the best way to approach that technically would be to wait for the resistance line to be crossed twice (failed break) and enter on a break of the support line? Otherwise you could be jumping the gun getting in - still that would give a favourable risk/reward.

A triple top is now in - I wonder if we can make a lower low now...

A daily close below the trendline on my chart above would be a start. Perhaps we'll see a break down on Wednesday when the lottery numbers are drawn (who coined that for the inventories)?

 

[usman88]

I dont think there is any co-relation b/w 'volatility immediately after the inventories' and technicals/fundamentals. Thats pure panic time and although I am a day trader I avoid trading for atleast half an hour after the inventories. About volatility dying in the future...i dont think soo
on the other hand looks like we are headed for a below 9450 close today

 

[tune]

Am I correct in thinking that the best way to approach that technically would be to wait for the resistance line to be crossed twice (failed break) and enter on a break of the support line? Otherwise you could be jumping the gun getting in - still that would give a favourable risk/reward.

How to trade a move that looks somewhat like this (or a move that looks somewhat like any move for that matter) has to be totally up to the individual.

Looking at the failed break/the successful not break in terms of previous and potential horizontal support and resistance: the intraday action today had much in common with the daily action and 98 or so was the price in question again.