Crude Oil Short Looking for a wave iv, in Elliott Wave speak. Ideal target $74.70. Plan to take gains on the way down, if that's what happens here.
WTI1! trade ideas
CL1!1.30.24 In this video I try to outline what it means for the market to expand thereby be coming more tradable. Yesterday oil had a two bar reversal to go lower... but it closed at the support area of a range box... and today it's an opening price trade to short... so it really has to start to move lower or this market should be exited with a small stop. But I prefaced the video by telling you that the market traded up to important sellers which is usually signified with a pink line from above... and so I would be waiting for this market to correct lower because at the current level the market is more controlled by sellers until it actually trades above the pink line on top. This is not the best example of a short trade but if I had taken the trade yesterday and stayed short, I still hold this trade with a small stop from yesterday. In effect, It's understandable that the market is probably going to trade lower.... but it is trading lower to the buyers because it's right at the top of a range box that is below the range box from above. I will make this more clear on a subsequent video... as I don't want to redo this video.
Crude Oil is Primed for Gamma ScalpingCrude Oil price have remained sharply range bound for the last two months. CME Group’s West Texas Intermediate (WTI) futures have traded between USD 70-80 a barrel since early November last year. Sharply shifting supply and demand outlook explains range bound trading in crude oil.
In this paper, we discuss diverging factors affecting crude oil price and illustrate gamma scalping strategy to harness returns from range bound price moves. Gamma scalping is a well-established dynamic options strategy that enables investment returns from sharply oscillating price moves.
CRUDE OIL’S DIVERGING PRICE OUTLOOK
Tailwinds powering the oil prices increase is fuelled by (a) OPEC+ members decisions on deep supply cuts, and (b) geopolitical risks in the middle east remains elevated. On the day of the conflict escalation, crude prices spiked 2.6% higher.
Some of these attacks have affected crude oil tankers in the region risking supply disruptions.
Headwinds pressing oil prices down include record US crude oil production. The US churned 13.25 million bpd (barrels per day) of oil in Q3. That is more than 3 million bpd higher than Russia (second largest producer).
EIA expects strong US production to continue through 2024 with growth driven by rising well efficiencies in US oil rigs.
Globally, crude production growth is expected to slow but still rise by 0.6 million bpd in 2024 with higher US production offsetting the decline from OPEC nations. Expectedly, this has led to a widening premium for Brent crude compared to WTI.
Demand outlook for crude oil remains uncertain. Slowdown in demand growth remains a concern. EIA forecasts global oil consumption to rise by 1.4 million bpd in 2024. This represents a slowdown in growth compared to prior years (1.9 million bpd in 2023).
Slower economic growth translates into lower crude oil consumption. As such, supply-demand dynamic may remain unchanged despite slowing production growth.
NAVIGATING DIVERGING OIL OUTLOOK
With both bullish and bearish drivers for crude oil in active play, a directional position in crude oil might not be able to provide intended hedge for adverse price move. In a market with plenty of uncertainty and characterised by oscillating prices, gamma scalping can be used to harness consistent gains.
INTRODUCTION TO GAMMA SCALPING IN CRUDE OIL
Gamma scalping is an options trading strategy in which a trader continually adjusts their holdings to profit from small price movements in the underlying, while maintaining a directionally neutral position.
Gamma scalping involves dynamic hedging by continually neutralising options delta. Delta is the value by which options prices change for every dollar change in crude oil price. Gamma is the value by which delta changes for every dollar change in crude oil price.
Gamma scalping profits from small & frequent volatility in crude oil prices regardless price direction. With gamma scalping, traders can gain from both upward and downward price moves.
ILLUSTRATING GAMMA SCALPING IN CRUDE OIL
Gamma can be scalped in multiple ways. Common among them involves establishing a long straddle which is a combination of long call and a long put using at-the-money (“ATM”) options expiring on the same date.
Hypothetically, we can follow three simple steps to set up gamma scalping:
Step 1: Buy (“Long”) ATM Call Option and Put Option (aka Long Straddle)
At the hypothetical strike price of USD 70/barrel, premiums required for buying Straddle (calls and puts at-the-money option expiring on 14/Jun 2024) is USD 12/barrel (USD 6 each for call and put) which translates to USD 12,000 per lot. At inception, the delta should be at or near zero.
In practice, delta for ATM calls and ATM puts can differ and the position may have a net non-zero delta. Investors can reference the pricing sheet on CME QuikStrike for realistic options premiums, delta values, and strikes.
The gamma of the long ~0.025 x 2 = 0.05. Gamma is the value by which delta will change for each change in crude oil price.
Long straddle at inception is delta neutral. Meaning, it does not have directional exposure. However, it has long exposure of 0.05 gamma which signals that delta will change when crude oil prices move.
Step 2: Dynamic Hedging When Crude Prices Move Higher
Consider an up-move of ten points with crude trading up at USD 80/barrel. This results in a new delta of +0.5 (due to Gamma of 0.05 and 10 point move in crude prices: 10 * 0.05 = 0.5 per barrel). This translated to delta of 500 per lot of long straddle.
To remain delta neutral, trader needs to sell 5 contracts of CME Micro WTI to balance the increased delta. As a result, the overall position now consists of:
• Long 1 x ATM call option with a strike price of USD 70, with expiry 14/June (LON24).
• Long 1 x ATM put option with a strike price of USD 70, with expiry 14/June (LON24).
• Short 5 x Micro WTI futures contract (MCLN2024) which provides exposure to 500 barrels of oil at USD 80/barrel.
Step 3: Harvesting Gains via Dynamic Hedging when Crude Prices Fall
Imagine crude oil prices fall to USD 70/barrel, new delta is -0.5 per barrel and -500 per lot of long straddle. To remain delta neutral, the trader needs to buy five lots of CME Micro WTI futures to neutralize delta once more. This results in a profit of USD 5,000 (sell at 80 and buy back at 70 per barrel; each lot of CME Micro WTI futures represents 100 barrels).
Overall position now consists of:
• Long 1 x ATM call option with a strike price of USD 70, with expiry 14/June (LON24).
• Long 1 x ATM put option with a strike price of USD 70, with expiry 14/June (LON24).
This trade can be executed multiple times repeating the same steps as above. If crude oil trades down to being with, neutralising delta would involve buying lower and then selling higher when prices recover.
SALIENT CONSIDERATIONS WHEN GAMMA SCALPING
Upfront Premiums: Long straddle requires an up-front cost. Gamma scalping will need to be executed multiple times to break even and recover the premiums. Up-front premium implies fixed downside with a well-defined maximum loss.
Dynamic Hedging: Gamma scalping requires continuous monitoring and adjusting of positions.
Time Decay: Options should be selected with sufficiently large days-to-expiry to minimize effect of time decay. Time decay of the option rise sharply closer to expiration massively shrinking the value of the long straddle.
Long Volatility: High gamma benefits from high volatility. The strategy should be utilized when volatility is expected to rise or remain high.
At Expiry: The options legs may expire at a net loss and require scalping to break-even. Example payoff analysis for different settlement prices for crude oil at expiry:
1. Settles at USD 60/barrel: The put option is US 10 in-the-money and the call option is worthless. Options P&L = USD (10 – (6+6)) x 1000 = Loss of USD 2000. Gamma scalping must have generated more than USD 2,000 to offset this potential loss.
2. Settles at USD 75/barrel: The call option expires worthless and the put option is USD 5 in-the-money. Loss of USD 7,000. Gamma scalping must generate at least USD 7,000 to break-even.
3. Settles at USD 70/barrel: The call and the put option both expire worthless; the entire up-front premium of USD 12,000 results in a loss. To break-even gamma scalping must generate at least USD 12,000.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. 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
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CL once a week update Jan 29thSharing CL update from TTR.
Will be updating CL once a week or so.
CL is trending above its 5EMA on a daily level; first support sits at 76.10, and the main support is at 74.55±
The main target is above 82.50
Bullish trend was just started imo
Crude Oil Futures Trade SetupLooking for for demand in a 15 min zone and will trade on 1 min timeframe
CL is coming back (come around trade) to breakout from a rounded bottom.
This is a trade on an 4hr uptrend and the breakout that allows room for a 3-5X return
Crude Oil Finds a Bottom! Crude prices struggled in 2023. Although major production cuts were implemented by OPEC member countries, the USA has ramped up production, and concerns about global growth have emerged.
While economic growth and demand remain a headwind moving forward, the question is whether crude is trading at fair value or if it may be undervalued.
Inventories and Seasonality:
Recent crude inventories data from the EIA revealed a decrease of over -9.23 million barrels, compared to the expected draw of -2.15 million barrels. Demand is beginning to ramp up, and consumers tend to travel more as the winter season comes to an end. Middle East tensions are still elevated, adding another layer of uncertainty to the supply chain dynamics.
Technical Analysis:
Crude has tested the 67.50-70 range many times, and this area continues to be a major support. Recent price action displays a decisive break above the 50-day EMA. Prices are now attempting to test the 200-day EMA, a much more significant area of resistance. Breaking above this 200-day EMA, coupled with a Golden Cross, could be exactly what crude needs to find upside momentum and enter a bull market in 2024.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. 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
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
CRUDE OILPreferably suitable for scalping and accurate as long as you watch carefully the price action with the drawn areas.
With your likes and comments, you give me enough energy to provide the best analysis on an ongoing basis.
And if you needed any analysis that was not on the page, you can ask me with a comment or a personal message..
Enjoy Trading... ;)
Crude oil could rally from $72Price action has been very choppy on the daily crude oil chart, but if we place a line chart over the top is shows prices are trying to break out of a small triangle / pennant. Whilst these are usually expected to be continuation pattern, they can also make decent reversal pattern. And this case, we've see prices hold above $70 on a closing basis, and the lower candle wicks made a series of higher lows. Momentum is now turning higher.
Bulls could seek dips down to $72 (yesterday's low) or a break of its high, with an upside target around $78, near the 200-day MA and 100-day EMA.
#202405 - a weekly price action market recap and outlook - oilGood evening and i hope you are well.
wti crude oil
Here my commentary from last week:
If you have read the gold one, this one is self explanatory i think. Market is compressing prices and will soon break out. Which direction? Guess. Your’s is as good as mine. I won’t say more about it. Breakout will come soon, so if you haven’t played the range so far, you should not start now because the odds of a breakout rise daily.
The bulls got their big breakout and we made 465 points last week. The next obvious target is 80 where i expect sideways movement. I also don’t think we can get there without a pullback first. Target for that pb is around 76.5 - 77. We can also just trade sideways in a tighter range but i think a retest of the 2023-12 high is an obvious magnet.
Bull case: Clear breakout of the triangle and they want a measured move up to 84. First more reachable target is the 50% pullback from the big bear trend which started 2023-10 and that is around 79 and where i expect more sideways trading. If bulls can keep this above the daily 20ema, i expect they will go for the measured move target of the triangle which we broke out of, to around 84.
Bear case: They see this as a leg inside a trading range 68 - 80 and there are 2 potential bull channels and we are at the top of both. Bears want a strong reversal and trading back to the tight bull channel bottom at around 76. They also see 3 clear pushes up inside that channel and have reasonable arguments to short up here and make bulls want to take profits.
outlook last week: “neutral (means sideways)” → bad outlook, since we got a big bull breakout
short term: sideways to down for a pullback but market is clearly always in long for now. so pullbacks will fail and we trade higher to at least 79.5 or 80.
medium-long term: odds for higher prices (up until maybe 90) raised significantly but i want to see market trading above 80 first. above 80 i turn full bull for 90 or higher.
Crude oil back about $96 a barrel With the slowing of oil production
and conflict at the Nile, I think that oil prices are
going to increase, if the fed decides to cut or leave interest rates unchanged
this may weaken the USD and strengthen other currencies creating more demand for oil
and if inventory continues to lessen you will see a further surge in oil prices.
otherwise, if the fed raises interest rates next week and productions issues come to resolve
oil prices will begin to drop and I will update this post with a bearish Analysis.
WTI Jumps to $78, Key Fibo Level - The Next Big Risk?Mega-cap tech’s climb to jumpstart 2024 fooled many strategists who called for value, cyclical, and small-cap niches to outperform. The same old playbook has been in full swing, but could that be about to change? Consider that banks, not chips, ended this week at fresh multi-year highs following a late-week pullback among the big semiconductor names.
But there’s more action out there that few are paying attention to. Have you seen WTI crude oil recently? Tensions in the Red Sea have been ongoing for many weeks, but it has just been over the last few sessions that WTI has taken flight. The prompt month now trades near $78. Gasoline futures, meanwhile, rose above $2.30, implying a national retail pump price average near $3.25 over the coming weeks.
Consumers might not like that, and it would come immediately after a sanguine set of University of Michigan Surveys of Consumers for January. We will get an updated read on that Friday next week. I also point out in today’s featured chart that US light sweet crude oil is now at a pivotal Fibonacci retracement level on the chart. Watch how the bulls and bears battle it out as the calendar flips to February. If we rally through $78, and hold it on pullbacks, a rotation in the market could very well take place, right as mega-cap tech reports Q4 results.
Crude Oil break above 50+ daysWTI Crude Oil break above supply zone after sideway for 50days +
on the breakout day price move very strong and close almost full candle
I use Volume profile VAH that should act as support after breakout
RR = 2
Light Crude Oil Futures (NYMEX) ready to soar again?Light Crude Oil Futures corrected sharply at the end of 2023, however finding strong support levels from which a new upward trend may start. As long as the green trendline acts supportive, a longer-term buy-signal is active.
Huge Win On Crude OilTrendCloud gave us a huge win on the Micro Crude Oil this week.
4 hour trend is up
1 hour trend is up
Momentum was also up on both timeframes creating the perfect storm.
TrendCloud Signals on the 5 minute chart were sent directly to our phones and alerted us to the trade.
Multiple winners on Crude Oil all through the week.
If you want the exact trade plan that we use in the live trading room then just click the link in my profile.
Chris Juliano
TrendCloud Trading
a daily price action after hour update - wti crude oilGood evening and i hope you are well.
Here is a quote from my substack on Monday about oil:
"Most interesting market today. I do believe its a breakout of the bear channel, beginning 2023-09, if bulls can generate follow through tomorrow/Wednesday. The trend line on higher time frames is more of an area than a narrow line with exact prices. But we are there and had a strong bull day. This could be leg 2 of a 3 legged move and a measured move target could bring us to around 80 again. That would certainly make a whole lot of bears cover and fuel the rally probably further. I’d be very cautious with shorts here and look for strength.
short term: sideways to up"
Being prepared pays. Daily close above 75 and market is accelerating. 80 is my next target but i don’t think we get there without a pullback first. PB could be deep to the lower bull wedge around 75.5 but if we get there, the odds that it holds are excellent.
short term: very short term, sideways to down but ultimately bullish for target 80. from there i wait for market to show new impulse.
medium-long term: up
trade of the day: that 1h 20ema held since Wednesday before us open. look for longs.
Crude oil is a buy with S/L 70.00The entry prices for long position at 71.80 and 70.60 offer attractive entry points near support levels. A stop-loss at 70 provides a good risk management buffer, limiting potential losses if the trade turns against us. The target prices at 73 and 75 represent potential profit levels based on technical analysis.
Gold Silver Dxy Tesla Oil1.24.24 The price action of the dxy is making it tough to trade the metals. I explain this with some detail in the video. Even though that is true you'll see that there's more volatility with a silver because it's $5,000 a point and it's pattern behavior can you yell the profitable scalp. This is not true for the gold where you could make some money but it's much more difficult to trade. I think most people who trade these markets would tell you that silver is more difficult to trade for various reasons. Tesla is trading in a range box with the market trading with lower highs to its current support area.... this is a disappointing time to be in a market like this when you bought it at such a good price not too long ago.... and the market actually made good reversal patterns of both directions but now it's trading to a range box that is contracted comparing its current pattern after it's had very good moves lower and higher and now it's settling into a contracted range.... and arrange is a range as long as it's ranging::: who knows how long it's going to do this... and whether it will break higher or lower? There is not enough volatility in oil for me to trade the market.... but I'm sure this will change and I'll know what it looks like when it happens... and so I will wait. I will try to post a video when I see an opportunity.... as a buyer or a seller.
Crudeoil - Diamond setup and minor 2nd wave CorrectionCrudeoil tested LS Kink wiith 3Drive and Failed QM followed by Stacked RS. Lower side LS KInk already tested at retracement of 786.but 2nd wave looks like isint completed . one more fall expected before starting 3rd long wave.
analysis grafical for CL
CL it's going to know an upward wave.
So the procurement process has to start.
CRUDEOIL Buy Setupsuper valid looking. leave a comment if you like my entry setup. this share purpose only for educational learning.
note: for more details check chart
OIL FUTURES Stock Chart Fibonacci Analysis 012224Trading Idea
1) Find a FIBO slingshot
2) Check FIBO 61.80% level
3) Entry Point > 74/61.80%
Chart time frame : B
A) 15 min(1W-3M)
B) 1 hr(3M-6M)
C) 4 hr(6M-1year)
D) 1 day(1-3years)
Stock progress : A
A) Keep rising over 61.80% resistance
B) 61.80% resistance
C) Hit the bottom
D) Hit the top
Stocks rise as they rise from support and fall from resistance. Our goal is to find a low support point and enter. It can be referred to as buying at the pullback point. The pullback point can be found with a Fibonacci extension of 61.80%. This is a step to find entry level. 1) Find a triangle (Fibonacci Speed Fan Line) that connects the high (resistance) and low (support) points of the stock in progress, where it is continuously expressed as a Slingshot, 2) and create a Fibonacci extension level for the first rising wave from the start point of slingshot pattern.
When the current price goes over 61.80% level , that can be a good entry point, especially if the SMA 100 and 200 curves are gathered together at 61.80%, it is a very good entry point.
As a great help, tradingview provide these Fibonacci speed fan lines and extension levels with ease. So if you use the Fibonacci fan line, the extension level, and the SMA 100/200 curve well, you can find an entry point for the stock market. At least you have to enter at this low point to avoid trading failure, and if you are skilled at entering this low point, with fibonacci6180 technique, your reading skill to chart will be greatly improved.
If you want to do day trading, please set the time frame to 5 minutes or 15 minutes, and you will see many of the low point of rising stocks.
If want to prefer long term range trading, you can set the time frame to 1 hr or 1 day.
