Summerset
Short

Shorting Oil futures - Wave/4B down

TVC:USOIL   CFDs on WTI Crude Oil
Correction 4A of wave-3 finished @ $34.66
I expect a double top to form as shown on chart or at least an H&S .
Compile a 3 contract short position:- half of the position in the <$33-$34 zone> & the other half in <$34-$34.6> zone.

place limit sell 1/2 contract @ $ 33.10
place limit sell 1/2 contract @ $ 33.40
place limit sell 1/2 contract @ $ 33.70
place limit sell 1/2 contract @ $ 34.00
place limit sell 1/2 contract @ $ 34.30
place limit sell 1/2 contract @ $ 34.60

Targets 700 pts away @ 50% of the ending diagonal of wave-4A = < $25.5-$26.25> = (correction of wave-C in ending diagonal ).

Place Buy stops for 3 contracts at $35 to hedge the position instead of placing SLs . The total Risk for the position is thus -$1150 / contract on average, if the hedges open & -$3450 for all three contracts, on open hedging.

-$3450 equates to 17.5% Risk on an $ 20000 Account. If the Account is $ 10000, half the position size to 1 1/2 contracts divided respectively at shown entries.

There is a possibility on breakout of negative corona virus / unlock feed back for this wave 4B to turn into an impulsive- 5th instead to truncate somewhere below $10.

Take Good Care & Stay safe

Comment: $33.1 & $33.4 &33.7 filled so far.
Comment: $33.1 & $33.4 &33.7 & $34 filled so far.
Position Average $33.55
Add Buy stop for 1 1/2 contract at $35 Target 38.9 (To fill the gap showing on charts)

This addition is a "zero hedge" policy, in case price breaks above $35 & continues on a bull run targeting the gap at $40. In that case enough money would be made by the 1 1/2 additional long contracts to enable liquidation of the position as a whole <$33.5 shorts vs $35 longs> at NO loss to the account.
Comment: all limit shorts filled to average holdings short at $ 33.85
Raise TP to $ 26.80 = $ 7/contract
Comment: Price made $ 32.16
Take SL to B/E for all short holdings (break even inclusive comm costs should be ~ $ 33.80)
Remove all buy stops / protection hedges
TP remains the same @ $ 26.80

There could be a bounce at the H&S neckline <31.30-30.80>. Its discretionary to take profits there & reload shorts in the Right shoulder of the formation.
Comment: Close all holdings (Take profit) at market $ 31.35
= $ 2.5 / Standard contract
This should amount to $ 3750 (1 1/2 contracts) on an $10000 account & $ 7500 (3 contracts) on an $ 20000 account.

Comments

this much down turn may not happen. I see profit taking to 27 level but not below that. if it goes, i will do ALL IN all OIL stks
Reply
Summerset LetsBeMillionaire
@LetsBeMillionaire,

$27 is between the 78.2% & 61.8% Fib of the ending diagonal wave 4A - rising from $9.97 to $34.66
61.8% Fib of this diagonal = $25.08 (above which is where I am taking profits).
50% Fib of this diagonal = $22.19
38.2% Fib of this diagonal = $19.39

Oil is in a bear market. The current correction I believe was heavily supported by Oil gulf producers acting through intermediaries as investors, to avoid recurrence of the dilemma that occurred with April contracts in May. Professional investors acting on their behalf will know that any rally to stay healthy must test but should not fall below its 50% advance = $22.19 in this instance. These people have deep pockets, they will then come in between < $20-$22 > to re-support the market. Unless of course there is a force majore like what happened with the May contracts. In which case we would see prices spike to $10 again, and they would quickly interfere.

In all cases then, my take is that it is very safe to place TPs at $26-$25.50 (61.8%) for the current move.
And if your station allows it place limit entry longs between $10 down to $8.

Take Good care & Stay safe.
Reply
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