A simple sell strategy for Heating OilWith price and “commodity premiums” that we track showing signs of a structural shift, we think these represents potential tradeable set-up in the mid to long term as supply and demand finds some way to normalization after the pandemic & war shocks over the past 2 years. Hence, we think commodities will continue to be where the actions at.
With winter just about over, we thought it would be perfect time to look at the ‘talk’ of pre-winter, Heating Oil.
After a staggering 600% run-up from the depths of 2020 to the peak pre-winter last year, Heating Oil might just be on the opposite journey now.
On a weekly timeframe, Heating oil has decisively broken the uptrend established since 2020 and now sits on the support level for the 2011-2014 period of 2.75.
Zooming closer on the RSI, the current level proves to be a pivotal point for heating oil’s trend, as each time the RSI crosses below the 40-level, it is followed by an accelerated move lower. In fact, taking a short position every time the RSI crosses below the 40-level would have netted an average of 27%, if you manage to catch the bottom!
Even if you can’t catch the bottom, following the strategy, where we build a short position in heating oil when RSI crosses below 40, and hold it until RSI crosses back above 40, would still make a respectable 18.3% average return.
On a shorter timeframe, Heating Oil seems to be trading within a descending channel, with the trend pointing lower.
Another thing we like to look at is the relationship/premium between Heating Oil and Crude Oil. However, as the two types of contracts are quoted differently, we have some work to do to rebase the prices into a comparable format. Given that Heating Oil is quoted in US Dollars and Cents per gallon, while Crude Oil is quoted as US Dollars and Cents per barrel, we can convert Heating Oil to be denominated in barrels.
1 barrel equals to roughly 42 gallons, therefore, we can simply multiply Heating Oil price per gallon by 42 to get its price per Barrel. Given Heating Oil is 2.7505 USD per gallon, this works out to be roughly 115.52 USD per barrel.
This allows us to see the relationship between Heating Oil and Crude oil. The former is trading at a premium to latter.
Over the past winter the Heating Oil premium reached it’s all time high, toping out close to 100 USD per barrel more than Crude Oil. With Spring now in sight, it appears a new season has dawned upon this premium, with the Heating Oil - Crude Oil premium now falling below the previous highs in 2011-2012. Should this continue, then we can expect the price gap between the 2 types of oil to close, with Heating Oil being the likely culprit to drive it lower.
The general downward trend in current Heating Oil prices, falling Heating Oil premiums and historical RSI-based sell trigger, all point towards a potentially lower Heating Oil.
We would consider setting up the trade in the following 2 ways to express our view:
1) Wait for the RSI to cross below 40 and sell, setting the take-profit based on the RSI crossing back above 40 again to close the position. Each 0.0001-point move in Heating Oil Futures Contract is $4.20 USD
2) Trade the spread between Heating Oil and Crude Oil by taking a short position in the CME Heating Oil Futures Contract and a long position in the CME Crude Oil Futures Contract. Given that 1 Heating Oil Contract is for 42,000 gallons, which is equivalent to 1000 barrels, we can Short 1 Heating Oil and Long 1 Crude Oil to form the spread, in order to match the position size of the contracts.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
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The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Reference:
www.cmegroup.com
www.cmegroup.com
HOJ2025 trade ideas
HO 04 23 close to LOWEST YEARLY LEVELPOTENTIAL NEW UP SIDE 5 ELW IMPULSE
see on this daily graph potential 5 ELW bull impulse
Fib time estimation around 30 03 23
3 topS 3 Bottoms patternHO about to bounce up
HO is quite easy to trade because not so liquid and often show a bit large difference beetwen Ask and Bid
So the Price tells you where the trend is going to move next ... More over HO offers large profit
This is a likely bounce pattern with 3 Tops and 3 Bottoms
wait for this impulsion to go long Prior to enter the trade
this is just an advise that is often repeated
See here from CFTC.gov Last weekly Commitment of traders report
it shows a bullish pressure ;
January 24 COT report for NY HARBOUR ULSD
Long : 44.504
Short : 19.144
Trendline broken on Heating Oilon the back adjusted futures contract the ICHIMOKU strategy generated a short signal.
in the long term this strategy is profitable on all assets
last short as profitable for 10 days then turned negative (but it was possible to earn a lot with that entry)
no financial advise but
suggestion move the stop to break even
one the high of a daily bar is below the entry price.
ULSD Futures short 1D targetThe chart points suggest a continued bearish move with the short target set at the 1D Cosmic Channel basis line and the stop set at the 1h Cosmic Channel basis line.
Heating Oil to break HigherHeating oil finds itself at a pivot point after reverse at support levels not seen since Feb of 22.
-We are only in December heading into the coldest months of the year.
-If this Pivot point holds cold see massive take gains long.
The math I have is entry @ Market price Right now is
3.1189 @ $4.20 per tic
SL 3.090 =
TP 3.99 =
Trade the nearest Energy future it makes sense to trade long only the latest energy future, as they are in backwardation (future prices are cheaper than current one)
so huge gains on the november contract that expires on 31th oct.
Heating Oil / Low Sulphur Gasoline LONGthe NYMEX:HO1!
breaks usually one day earlier before
VANTAGE:GASOIL
follows to the upside
in the past it was profitable to get into gasoil instrument even if there was no break above the prior high...
as Low Sulphur Gasoline follows Heating Oil
Daily HO analysisDaily HO analysis
Sell trade with target and stop loss as shown in the chart
The trend is down and we may see more drop in the coming period in the medium term
All the best, I hope for your participation in the analysis, and for any inquiries, please send in the comments.
He gave a signal from the strongest areas of entry, special recommendations, with a success rate of 95%, for any inquiry or request for analysis, contact me
NY Heating Oil ReliefNYMEX:HO1!
NY Heating Oil Relief
I just filled up the heating oil tank.
$4.40 per gallon for 200 gallons = $880 delivered to the Fat_Fat residence.
Pre-Covid it was half that price.
Imagine being in Europe this winter..... Damn.
Hopefully we see this big "C' wave down.
Targeting the 0.618 fib at approximately $2.35
My fellow New Yorker's need some relief.
Fat_Fat
Daily HO analysisDaily HO analysis
Sell trade with target and stop loss as shown in the chart
The trend is down and we may see more drop in the coming period in the medium term
All the best, I hope for your participation in the analysis, and for any inquiries, please send in the comments.
He gave a signal from the strongest areas of entry, special recommendations, with a success rate of 95%, for any inquiry or request for analysis, contact me
Daily HO analysisDaily HO analysis
Sell trade with target and stop loss as shown in the chart
The trend is down and we may see more drop in the coming period in the medium term
All the best, I hope for your participation in the analysis, and for any inquiries, please send in the comments
FAILED TO DUMP - A9N1 - ARGUS PROPANE - SAUDI ARAMCO - WEEKLYThank you for your likes and comment. Little bit of risks have been taken in this analysis. Still, all, under probabilities. Thank you for your support.
Saudi Aramco price has been illustrating what is "divergence" in chart analysis.
It is back to an important price point.
From here, it is possible to see the price ranging to then recover fon a long run in the "long" direction.
Fundamental analysis here is crucial as it might probably depends on the World Political Climate and "Tensions" negotiations.
TRADE OF THE WEEK: Heating Oil longCrude Oil and Natural Gas did not move up last week, but instead the LOW SULPHUR GASOIL ( VANTAGE:GASOIL (10 contracts moved up 1000$) or NYMEX:HO1!
is now up 10.000$ per contract last week.
If you are not invested yet, backtests show that entering on breaks above 4 hour bars with trailing the stop below the last two 4 hour bars was profitable.
You never know when the rally is over, 22th of august was a low last year that gave me the hint to not exit at the double top.
Beginning of september backtests show all commodities get sold, so lets see what happens next week...
ULSD / Diesel Fuel LongThis analysis is contingent on data that cannot be cited due to the source's explicit restrictions placed on republishing without expressed written consent.
ULSD is of particular interest in the energy markets for the following reasons:
• It is quoted based on delivery at New York Harbor. This means that it has localized supply / demand factors related to the Eastern United states. Data shows supply is particularly tight at this location.
• Traders are exporting virtually all US oil overseas due to the spread between WTI and Brent
• No tankers set to deliver low sulfur distillates to New York Harbor for over a month.
On top of these factor, there's a clear support zone at the current price. Given that simple technicals are lining up with fundamentals, the trade seems favorable. Major risk factors include OPEC+ meeting, however I speculate that OPEC will not increase supply due to negative data regarding oil consumption.
NY Harbor ULSD Futures (HO1!), H4 Potential for Bearish MomentumType : Bearish Momentum
Resistance : 3.7979
Pivot: 3.5345
Support : 3.1892
Preferred Case: On the H4, with RSI moving along the descending trendline and price moving along the descending trendline, we have a bearish bias that price will drop to the pivot at 3.5345 where the 61.8% fibonacci retracement and pullback support are. Once there is downside confirmation of price breaking pivot structure, we would expect bearish momentum to carry price to intermediate support at 3.3537 in line with swing low support and 61.8% fibonacci projection. Should price break intermediate support, we would have a bearish bias that price will drop to 1st support at 3.1892 where the swing low support, 127.2% fibonacci extension and -27.2% fibonacci expansion are.
Alternative scenario: Alternatively, price may rise to the 1st resistance at 3.7979 where the swing high resistance and 78.6% fibonacci projection are.
Fundamentals: The chance of further Federal Reserve rate increases has grown as a result of the US CPI data released overnight showing higher-than-anticipated inflation growth, raising the risk of a worldwide recession and giving us a bearish bias on the oil.
Most important strategy in 2022: 30 min fractal S&Rthere is a strong support or resistance area on 30 min charts when looking at prior extreme points (fractals)
today buying a gap down heating oil or two days ago shorting heating oil are very profitable trades.
the support is clearly on top of the prior 30 min bar at an prior extrempoing
whereas the resistance is clearly at the low of a prior top bar.
Heating Oil target at 1.61 extensionheating oil had a nice run, make sure to secure profits at the fibo extensions
Heating Oil and Coffee triggered new long signalsupdated my setups page www.tradingview.com
Heating Oil and Coffee triggered new long signals in addition to the index futures the energy commodities also seam to move higher...
Jet Fuel Takes OffWhen will jet fuel stop making all time highs? I think this speaks volumes about the continued pace of inflation combined with a post-2020 "get me outta here and fly me somewhere" mentality, in addition to other factors. So now people want to fly after not flying for a few years. Why do we have to pay mafia level prices now? I guess now it's time for the propaganda machine to shift the narrative to blaming people for their sudden surge flying habits, which still considerably falls short of pre-2020 levels. Rather than looking at the true source of price inflation: Yes, I mean the mafia overlords themselves at the Federal Reserve, their higher order of archdemon overlords will shift blame to something else. If our eating habits were to become an increasing result of centralized policy, for example, we'd all be forced to eat hot dogs and drink orange juice right about now - the only items in the CPI where it seems inflation is somewhat accurately portrayed.
I can imagine the posters already:
PLEASE refrain from your disgusting urges of flying, LOYAL citizens!
Take this delicious and nutritious diet of HOT DOGS and ORANGE JUICE instead.
Do Uncle Sam PROUD, FIGHT inflation TODAY!
Do your part for OUR NATION!
Oh my...
Seriously though, you gotta give some respect to orange juice , SO FAR:
Good luck and don't forget to hedge your bets! ;)
New short trade: Heating OilIn addition to S&P and Bitcoin some commodities also have nice short setups:
www.tradingview.com
Target as usual on countertrend trades are prior open or closing prices.
Energy - Oil / DeiselTrucking - specifically the $TRAN and Deisel Fuel Oil is under immense duress.
The primary support system for moving goods is seeing lasting stress which will
lead to further supply shortages.
Shortages will begin to appear at an accelerated pace into August.
_____________________________________________________________________
Stocking up on basics... a very good idea.
