jangseohee

Daring call for a bottom now?

NYMEX:CL1!   Light Crude Oil Futures
1781 58 12
We all know that to make money in any market, all we need to do is to buy low sell high (excluding shorting)
Hence, bottom fishing is a risky and yet extremely rewarding approach to accumulate when the market are too bloody

Let's take a look at this monthly log chart since 1989. Since this is a daring bottom call, i will exclude the RSI overbought that corresponds to oil             price topping.

For the past 15-16 years, there were only 3 instances when RSI hit a monthly oversold value of as close as 30 highlighted in blue circle. And each times RSI became oversold as highlighted, oil             price rebound in V-shape manner making considerable upside movement.

Now the same situation has presented in front of you yet again on the 4th time. Do i have the gut to buy now? What is my exit strategy if thing goes against my anticipation?

It is too simplistic ain't it? Investment advice always preach that past repeated performance DOES NOT guarantee that it will happen again.

P.S. My humble anticipation for worst case scenario for NYMEX crude oil             price is ~39 where this level has been support and resistance before.
Trendline appears misalign on your chart. The trend line I see is targeting a much lower bounce

snapshot

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jangseohee AlphaxRx
The "misalignment" is due to my usage of Log scale. Hence resulting a monthly support of around 67-68 which we are seeing for the past 3-4 days :-)
If price continue to fall, then your chart prediction would come through
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dp jangseohee
You draw straight line in log-normal scale.

In normal-normal scale it corresponds to exponential, isn't it?
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I select "Log" at bottom right of the chart, then i draw the trendline.
If you toggle the "log" buttom two times, you will see "changes"

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dp jangseohee
Toggling the "log" transforms straight line to the straight line on TV -- that's the coding mistake.

Look, just a simple math:

Let log( p(t) ) = A*t +B, where A and B are the constants, that's what you see as a straight line on your graph. Here "t" is the time "p(t)" is the price.

Now let's take exponent of both sides: 10^( log(p(t) ) = p(t) = 10^( A*t+B) = C*D^t, with new constants D=10^A and C=10^B.

So, we have p(t) = C*D^t in normal coordinates. Here symbol "^" means "to the power of", just like 2*2 = 2^2.
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Wow hat off to you,
i only understand that log will change the trendline and therefore S/R line
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dp jangseohee
NP, it's just a simple thing that vertical scale deformation (which is taking the log of the price) will deform the straight line. So having support in the form of straight line in normal axises is equivalient to have exponential (curved) support for the log-normal ones.

The good question is -- why we prefer linear support over curved one? :)

The answer would probably be because we just came out of no-computers era :D

If seriously -- exponential support would be probably too fastly growing for oil, assuming that asset price should grow exponentially in time.
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you have a point, the whole purpose is to make the incremental from 1 to 5 dollar is identical to incremental from 200 to 205
which is why AlphaxRX notice my "misalignment"

thats why every technical tools has pros and cons, i have been using log for quite sometime, ;-)
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another thing, you touched on the "Curve"
When the price in any chart shoot up very fast, we tend to get a "Parabolic" price action rendering trendline useless :-)
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dp jangseohee
The "Parabolic" one is even more interesting law -- it's not exponential, but so-called "blow-up" one: A/(T-t), where "A" and "T" are the constants, and "t" is the time. "T" is the time at which the bubble bursts.

"Blow-up" growth exists for finite time until t=T, not as exponential or linear growth, which exists for the whole time-axis.

The word "parabolic" is mistakenly used , it has nothing in common with parabola. It's explainable though, since people who observed such growth which is faster than "t", assumed that any faster growth has to go as "t^2" (parabola), LOL
+1 Reply
DP, you are totally swimming in your element :-)
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jangseohee Mickette
LOL
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dp jangseohee
I can continue on the matter, for a long time :)

The name "parabolic" = "blow-up" is borrowed from physics of the shock waves, or light propagation in the optical fibers . In fact, from the shock waves first. That's happening when bomb blows -- there is formation of the shock wave, the destructive pressure jump propagating in the air, tearing away hands and legs, God forbid. The pressure profile in such shock waves follows this "blow-up" law. Same thing happens in the optical fibers, when you are getting internet signal in your house transparent fiber, through which you are connected to the outer world.

What is nice about "blow-up law"? You can predict from it when the bubble burst, i.e. close the position closer to the maximum point in price -- since the solution exists only until point t=T. You can be sure that there will be drop after t>T.
+2 Reply
Hi dp,
i have been getting even more PM on log vs arithmetric scale, though not the mathematical equation, but
taking the DXY log chart i posted as an example, the 30 years downtrend line is NOT broken yet, but a normal arithmetic scale of DXY HAS broken the 30 years downtrend line!
Fed playing with Symmetry, Amen
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dp jangseohee
jangseohee,

I don't see any contradiction in your observations.

You draw the straight line in normal coordinates, which is broken. Then you hit "log" button in the RHS of the screen and see another straight line, which is not broken, right?

The problem is there is programming mistake in TV, since the shape of your straight line has not been changed -- it remains straight.

Well, you can draw the straight line in log-normal coordinates too, that's no problem, but there is NO CONNECTION between straight line in the original normal-normal coordinates and log-normal coordinates you obtained by pushing "log" button. What you obtain, is just different arbitrary straight line.

Let me give you maybe more understandable explanation. Imagine that your normal-normal graph is drown on the piece of rubber, but not the rigid surface like computer screen or piece of paper. Let's draw the straight line on it.

Now pull the portion of the rubber by fingers in one point, and it'll get deformed, right? Both graph and the straight line! Straight line wont be straight anymore! Something like that happens when you go from normal to log scale.

You can draw as much as you like straight lines in the log scale, but when you release your fingers on the rubber sheet, it'll return to normal scale, and instead of straight line you again will get some curve.

Mathematically speaking, straight lines are not transformed into the same straight lines with logarithmic transformation back and force.

Therefore, don't get worried about non-crossing of the straight line in transformed log coordinates -- if we didn't have programming mistake in TV, you would get the same crossing situation, but the price graph would cross the CURVED line.

Please ask me another questions until we agree on the problem.
+1 Reply
Yes Sir
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dp jangseohee
Jangseohee, I came up with nice simple explanation to your question.

Let's look at the graph in normal coordinates where you've got the cross of the straight trend line by price. Get the date and time where you see the cross, and write on the piece of paper number corresponding the trend line at this point and, say, close price of the candle.

Now take the calculator, take the log of this numbers (that's exactly what TV does) and plot those numbers at the same date and time at log chart, which was draws by TV. You will see that one of this numbers will fall right at the candle, but another one will fall not on the trend line as supposed to be, but different place.
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jangseohee AlphaxRx
My log scale trendline has been busted! :-)
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China's been buying up futures as of late. Interesting to see if big companies that rely on oil start buying up oil futures. Saudi's are set on maintaining supply where it is.
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menorad QuantitativeExhaustion
Actually this was in the news today WSJ "Saudi Arabia Sees Oil Prices Stabilizing Around $60 a Barrel" http://online.wsj.com/articles/saudi-arabia-believes-oil-prices-could-stabilize-around-60-a-barrel-1417623664
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Seeing and doing are too different things.
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I see oil at $60, but I'm not going to do anything about my supply. Your problem you deal with it.
+1 Reply
jangseohee QuantitativeExhaustion
Hi JR, how do you find out that China has been buying crude oil futures long contract?
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It was mentioned on CNBC on Monday
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jangseohee QuantitativeExhaustion
ic, many Bakken field producers can turn a profit at just $42 per barrel :-)
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That was mentioned as well. 6% drillers need $70 or more. 80% can survive with oil 50-60.
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jangseohee QuantitativeExhaustion
Since USD has become so strong, that $80/barrel is equal to $68/barrel :-)
For those countries not using USD and need >USD 80 to be profitable..
its apocalypse time
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That's true as well. You really can't destroy the US or UK. PetroDollar/PetroPound is real.
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jangseohee QuantitativeExhaustion
Well, euro is about to be destroyed! if Draghi decided to boost DAX to ATH!
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jangseohee QuantitativeExhaustion
The fiscal break-even cost is $161 for Venezuela, $160 for Yemen, $132 for Algeria, $131 for Iran, $126 for Nigeria, and $125 for Bahrain, $111 for Iraq, and $105 for Russia, and even $98 for Saudi Arabia itself, as an estimation
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So Saudi is killing itself. I knew about V Y N I and Russia, but didn't know it was that high for SA
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menorad QuantitativeExhaustion
Saudi cost of production less than $10 per barrel, but they have the higher number to balance their budget.
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jangseohee menorad
That means there is a possibility of oil making a final low at 39 dollar per barrel, but by then Shell, Exxon & Chevron will perish as well :-)
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AlphaxRx jangseohee
That's a strong statement. If that actually came true. The bottom will probably be in. Ready to buy with a fist full

OPEC made a strong statement that they are willing to let oil price stay down for at least a year. They have $736 billion banked up. Also, they have deleverage from last crisis by restructuring much of their debt. There's a good possibility market will test the downside.
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jangseohee AlphaxRx
on a hindsight, its is a mild statement :-)
If crude oil can hit 39 again, stock will definitely follow sue,
like you i will pawn every single thing i have, long it and keep for 2-3 years!
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AlphaxRx jangseohee
lol =D
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Mickette jangseohee
Very interesting discussion. Thank you for resuming all the facts. Greetings from Germany.
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jangseohee Mickette
Guten Tag, Wie gehts Mickette?
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Mickette jangseohee
Gut! Danke! Dir auch?
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jangseohee Mickette
Mir geht es gut :-)
Are you a trading as well?
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Mickette jangseohee
Yes. My roadmap at the present moment for you
snapshot
+1 Reply
jangseohee Mickette
60 mins downtrend is broken, i would anticipate another slight lower low to wash out the bulls but indicator having bullish divergence for oil to propel to the moon :-)
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Mickette jangseohee
... to the moon :-)
Copper looks ready to 3.00...
Watching NatGas for an eventual tremendous bounce very carefully...
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jangseohee Mickette
previously Copper use to be a indicator but no longer now, US FED has decided to play god with USD
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Mickette jangseohee
What do you think about this?
Supporting Copper @ 3.00 is not a bad idea...
Bearish reversal GARTLEY is completed for now:
snapshot
+1 Reply
jangseohee Mickette
i am not good at Gartley though
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jangseohee Mickette
do you use LOG scale?
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Mickette jangseohee
Of course not!
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jangseohee Mickette
you reckon Draghi will take firm action on QE?
EURUSD, normal path vs ECB induced path
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Mickette jangseohee
To give you an answer on this matter I regret not to have ihm as my boyfriend ;-)
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jangseohee Mickette
ihm means??
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Mickette jangseohee
sorry him ... ihm was in german
+1 Reply
Mickette jangseohee
Where are you living?
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even if price move upwards, it is subjected to the triangle pattern!
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although the oil price drops so as the commodities, but my daily expenses keep going up! Inflation still going on
Petrol station here do not reduce their petrol price :-(
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Mickette jangseohee
The government always taxes its citizen at the end: at the petrol station.
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Oops catching the falling knife at 58.15
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Hi DP where are you?
We are heading for 50s before OPEC meeting
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