Crude Oil - A case for a drop to $70
Crude to $70?
Am I completely out of my mind now?
Well, some think yes...and me sometimes too when I do my TA.
So what is this chart analysis trying to tell us here?
Let's start with the white pitchfork:
The white pitchfork on this chart projects a higher price in CL within it's boundaries. And there is also the dashed line, which we Forkers call the Centerline or short CL.
From the rule set of the pitchfork we have a statistical evidence, that price will reach the CL over 80% (from where and when is another discussion).
And we see, price reached the centerline by the pullback after the sharp drop in March.
From there, price either returns back to the extreme from where it came. In this case, the L-MLH, which price did.
So far Crude seems to follow the rules very good.
Let's move on...
The L-MLH:
After price reached the L-MLH, price broke out of the pitchforks "channel". Do we have a rule for this case too?
Yes, and it goes like this: "After price opens outside the pitchforks channel, breaking the MLH, price is likely to test/re-test the line which it broke. In this case the L-MLH again.
And that's exactly what we see now. Price is testing the L-MLH for the first time, even trying to trade back into the pitchforks channel.
Now, if price fails to reclaim the channel, we will see lower numbers and potentially even a re-test.
What about the red pitchfork?
The red one is a modified one and has a historical background. More on this another time.
It's nice how price also followed the rules, reaching the centerline of the red pitchfork, and is pulling back to it's U-MLH = Upper-Medianline-Parallel. Even better, price trades very near the confluence point of the red U-MLH and the white L-MLH.
So what, how is this projecting a price of $70 in Crude?
Well, if price can't reclaim the channel of the white pichfork AND can't leave the red pitchfork, then it has to trade in the projected direction of the red pitchforks, if we assume Crude is still following the rules more or less.
Of course, on the way down everything can happen.
Most likely, in the mid-term time-frame, we observe that price at least doubles the range of the pitchforks channel extremes, so:
Target after leaving the channel = L-MLH - (U-MLH - L-MLH), at least
But we all know that trading is not about perfection. Trading is about risk management and taking statistical chances when they show up. And we need to follow proven rules, which should give us a statistical edge.
That's what we can do with pitchforks. Trading a great statistical edge, combined with a framework in our trading to know when to enter, exit and how to manage risk and money.
Wearing my short stalker Cap and hiding in front of my screen, I wish you all healthy and happy Easter.
Am I completely out of my mind now?
Well, some think yes...and me sometimes too when I do my TA.
So what is this chart analysis trying to tell us here?
Let's start with the white pitchfork:
The white pitchfork on this chart projects a higher price in CL within it's boundaries. And there is also the dashed line, which we Forkers call the Centerline or short CL.
From the rule set of the pitchfork we have a statistical evidence, that price will reach the CL over 80% (from where and when is another discussion).
And we see, price reached the centerline by the pullback after the sharp drop in March.
From there, price either returns back to the extreme from where it came. In this case, the L-MLH, which price did.
So far Crude seems to follow the rules very good.
Let's move on...
The L-MLH:
After price reached the L-MLH, price broke out of the pitchforks "channel". Do we have a rule for this case too?
Yes, and it goes like this: "After price opens outside the pitchforks channel, breaking the MLH, price is likely to test/re-test the line which it broke. In this case the L-MLH again.
And that's exactly what we see now. Price is testing the L-MLH for the first time, even trying to trade back into the pitchforks channel.
Now, if price fails to reclaim the channel, we will see lower numbers and potentially even a re-test.
What about the red pitchfork?
The red one is a modified one and has a historical background. More on this another time.
It's nice how price also followed the rules, reaching the centerline of the red pitchfork, and is pulling back to it's U-MLH = Upper-Medianline-Parallel. Even better, price trades very near the confluence point of the red U-MLH and the white L-MLH.
So what, how is this projecting a price of $70 in Crude?
Well, if price can't reclaim the channel of the white pichfork AND can't leave the red pitchfork, then it has to trade in the projected direction of the red pitchforks, if we assume Crude is still following the rules more or less.
Of course, on the way down everything can happen.
Most likely, in the mid-term time-frame, we observe that price at least doubles the range of the pitchforks channel extremes, so:
Target after leaving the channel = L-MLH - (U-MLH - L-MLH), at least
But we all know that trading is not about perfection. Trading is about risk management and taking statistical chances when they show up. And we need to follow proven rules, which should give us a statistical edge.
That's what we can do with pitchforks. Trading a great statistical edge, combined with a framework in our trading to know when to enter, exit and how to manage risk and money.
Wearing my short stalker Cap and hiding in front of my screen, I wish you all healthy and happy Easter.
Comment:
If we close within the red pitchfork, chances are high we will hit the red centerline:
Comment:
