captain_smollett
Short

USOIL. Five reasons to short oil

TVC:USOIL   WTI Crude Oil
1. Expected USD raise after US GDP revision and Janet Yellen´s speach.
2. This is a W4 corrective wave from a 1-2-3-4-5 count, started by the beginning of the month. It hasn´t arrived yet to 78.60% retrace which is not normal for this kind of wave: normally, there are bigger retraces.
3. Downtrend respected: hasn´t broken the blue downtrend line, hasn´t broken the fork´s median line . Looks like a re-test and further retrace.
4. BB showing a retrace from the cloud top towards the basis which should be tested.
5. Last week USOIL             crossed a weekly 88 MA and hasn´t re-tested it yet. Should be done by tomorrow or Monday

Bonus: Brent futures (CB1) switch to a new contract on the 30th of August. Perfect moment for dumping the old contracts and bring monies to the new one.

Outcome: will short CL1 tomorrow. Don´t want to short it now to avoid unnecessary risks overnight. Will open the trade manually but I expect the prices to be around 47.40 when this happens.

SL: 49.10
TP: 44.60
Comment: European session is very quiet at the moment: a little bit up, a little bit down... EUR and GBP wanted to grow but were returned to the initial point. Oil is slightly down but anything critical.

Looks like we have to wait until the US guys connect and US GDP revision is published to see any kind of a serious movement
Comment: Possible bearish Bat pattern forming. I´m out of the market, waiting to see on how it develops
Order cancelled: Pattern invalidated. No place for shorts
Comment: I would like to see today´s closing... Bull trap, bear trap...
Comment: Bearish flag formed. Watch for a breakdown, retrace and then it is perfectly shortable to 45.50-45
Trade active: Shorted at 46.68 today. Targeting 45.31. Will consider longs then.

Also, ABCD pattern may be forming as per chart below
Comment: Moving short to breakeven before the Inventories report
Comment: Setting a buy limit order at 45 ish. No SL as I have a countrary sell order so they will hedge each other
Comment: Buy limit order and a TP on short are adjusted to 44.50
Comment: It becomes more and more interesting.

For now, we have two scenarios: basic and alternative. I´m sorry for bears but I do not consider any bearish scenario for oil: the whole USD movement based on expectations from a rate hike on September was in vane: all FED speakers confirmed this in their most recent speeches. Friday´s NFP should put a logical end to all expectations on September´s hike.

Therefore, once USD starts moving down and DXY gets on its road to 88, we will have higher commodity prices.

As a consequence, the Basic Scenario is:

- Oil moves down to 44.15 area and prints a bullish run till 55 ish in the first half of September. Then we will have am ABC correction which should end around 43 ish and then the last climb toward 68-75 area before a big kraken arrives.

An alternative scenario is shown on a right-hand side:

- What we are currently living is a Wave 1 from 5, on a road to 68-75 area. Therefore, quote may decline to 43 or even to 42 and then we will have a massive bullish run which would stop around 60 ish. Some important correction will take place, back to 50-52 area, and then another run to 68-75.

I believe we may have an answer to which scenario becomes a reality by the end of this week: if we match or get below 43.49, the Basic scenario is invalidated as W4 cannot overlap W1. Therefore, we are in an alternarive scenario.

For bears: If oil goes below 39, you know what you have to do.

Charts below, as usual
Comment: It was quite quick: Basic scenario is invalidated, I´m switching to the Alternative one.

Key levels to watch: 43.00 and 42.75
Comment: Oil bounced from 43 and set 46 some minutes ago on the news. If it reaches 46 again, it is an excellent option for a last short. We target 41-40 area
Trade closed: target reached: All way down =)
snapshot


LEft-hand side: basic scenario. Right-hand side: alternative one
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captain_smollett PRO captain_smollett
Possible Gartley forming
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captain_smollett PRO captain_smollett
snapshot
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Trend line broken. Expect a retrace to re-test and a last leg to 44.50, Adjusting Buy Limit order accordingly and setting a TP on a short

snapshot
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snapshot


Possible ABCD pattern. Daily candle close beyond 45.31 would invalidate the pattern
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captain_smollett PRO captain_smollett
Flag broken
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Not many things have changed here except that it can bounce to around 48 ish on USD correction on Monday (if happens). I still expect a retrace to 45 as less and then it will be an excellent option for buying
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