QM1! trade ideas
WTI crude looks set to bounceMomentum has clearly been in favour of bears over the past week for WTI traders, but given it has fallen over 10% from the January high it could be argued the move is oversold (at least over the near term).
A doji formed on Monday to show bears are losing their grip, and the fact it is forming a base above the 2023 open price and $72 handle adds to the case for a technical bounce. Moreover, bears entered around the January highs but volumes declined as prices fell to suggest the move is running out of steam, and RSI (2) was oversold on Friday.
The bias is for a bounce towards the weekly and monthly pivot points around 74.50 - 74.80 whilst prices remain above Monday's low.
Accumulation before the level, free zone after the levelAccumulation before the level, free zone after the level
#202408 - a weekly priceaction market recap and outlook - oilGood evening and i hope you are well.
I try to keep it simple stupid (KISS) here with my chart this week.
bull case: bulls created a credible bottom around 70 and the buying pressure is there to get to 80 for the first time since 2023-11-07. There is a measured move target from the first leg i drew to around 82, the upper wedge trend line goes there and the big bear trend line starting from 2022-03 goes into that area as well. Decent enough probabilities if bulls can trade above 80 to also get to 82.
bear case: Bears see it as a trading range and bulls did not have a weekly close above 80 since 2023-11. They want a continuation of the range and sell everything above 78 because it has been working for 4 months now. Their first target is to trade below 77 and then a retest of the daily 20ema at 75. Bears have confidence in their assessment, because the bull legs in this trading range look much weaker than the bear legs.
outlook last week: “sideways (odds favor a small pullback) then up for targets 79-81”
→ Market was at 76.61 and is now at 78.46, so a good outlook since we got a decent dip to 75.6 before a big rally to 78.46
short term: sideways to up - invalid below 75
medium-long term: sideways inside the big triangle, above 80 odds favor bulls to get to the upper bear trend line around 82-84
Crude**CrudeOil:**
The price resisted the EMA200 all week, on Friday it broke through and closed above it.
The price is expected to rise to the top of the channel and do a pull back to the lower.
CL Daily Chart and range bound area The Daily chart shows the first corrective impulse lower from the highs and the ensuing consolidation which is visible
The target's from the weekly chart are still visible and need a close above $66/$83 to push into the draw boxes otherwise its more of the same within the range
i will post a 4 hourly chart see if we can dig deeper.
remember this is just wave analysis and price action and susceptible all the jaw boning that exists in the CL markets.
supply demand supply and demand zone drawn on CL quote. this is my own idea and opinion. use this idea at your own risk
CRUDE OIL FUTURE : CONTINUATION FLAG PATTERN?- since the impact below $95 during the 4th quarter of 2023, sellers have clearly taken control of the market. This sharp sell-off took prices to a new low of $68 at the end of December.
Since then, the acceleration of geopolitical tensions in the Middle East and the fear of a widening of the conflict to other nations such as Iran, prices have benefited from a renewed appetite from investors.
This has led the market to enter a bullish channel since the end of December 2023, the medium-term trend is therefore bullish.
- Prices are currently trading between their 2 long moving averages, close to the upper limit of their channel, currently challenging the significant resistance represented by the 38.2% Fibonacci at $78.25.
- Even if the bullish trend still remains valid on the medium/short term, the long-term situation stays bearish on black gold.
Indeed, the flag chart pattern generally plays the role of a continuation pattern, denoting a pause in the market before the resumption of the underlying trend.
However, geopolitical uncertainty remains high and the fear of additional disruptions to supply chains could continue to represent upward leverage for the market.
If prices manage to cross $75.25, then a new upside potential towards the $80.25/$81.45 zone could be unlocked.
On the other hand, if the $75.36/$75.90 zone were to be broken, the next supports will be found at the bottom of the bullish channel, then at $71.40 and even lower towards $69.05, $65.85 and $62.65 per extension.
Pierre Veyret, Technical Analyst at ActivTrades
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CrudeAttention! 🚨
This technical analysis is for informational and educational purposes only. It does not constitute financial advice. Remember to always research and consult with a professional before making investment decisions. Good luck! 📈💼🚀
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Will Crude Oil Continue Short?With recent Strike in Middle East, Oil price rocketing up.
However last night price retrace below Higher Low structure creating new pattern.
Will oil price going down seeking 75.50 and 73.65 ?
Just let the technical analysis play.
Quiet Before the Volatility Storm: WTI Crude Oil Options PlaysStay tuned!
Beyond this exploration of WTI Crude Oil options plays, we're excited to bring you a series of educational ideas dedicated to all types of options strategies. More insights coming soon!
Introduction to Market Volatility
In the realm of commodity trading, WTI Crude Oil stands out for its susceptibility to rapid price changes, making market volatility a focal point for traders. This volatility, essentially the rate at which the price of oil increases or decreases for a given set of returns, is a crucial concept for anyone involved in the oil market. It affects not only the risk and return profile of direct investments in crude oil but also plays a pivotal role in the pricing of derivatives and options tied to this commodity.
Volatility in the crude oil market can be attributed to a myriad of factors, ranging from geopolitical developments and supply-demand imbalances to economic indicators and natural disasters. For options traders, understanding the nuances of volatility is paramount, as it directly influences option pricing models through metrics such as Vega, which indicates the sensitivity of an option's price to changes in the volatility of the underlying asset.
By delving into both historical and implied volatility, traders can gain insights into past market movements and future expectations, respectively. Historical volatility provides a retrospective view of price fluctuation intensity over a specific period, offering a statistical measure of market risk. Implied volatility, on the other hand, reflects the market's forecast of a likely range of movement in crude oil prices, derived from the price of options.
Incorporating volatility analysis into trading strategies enables options traders to make more informed decisions, particularly when considering positions in WTI Crude Oil options. Whether aiming to capitalize on anticipated market movements or to hedge against potential price drops, volatility remains a critical element of successful trading in the oil market.
News as a Catalyst for Volatility
The crude oil market, with its global significance, is incredibly sensitive to news, where even rumors can precipitate fluctuations in prices. Recent events have starkly demonstrated this phenomenon, showcasing how geopolitical tensions, OPEC+ decisions, and inventory data can serve as major catalysts for volatility in WTI Crude Oil markets.
1. Geopolitical Tensions: Middle East Conflicts
Geopolitical events, especially in oil-rich regions like the Middle East, have a pronounced impact on oil prices. For instance, conflicts or tensions in this area can lead to fears of supply disruptions, prompting immediate spikes in oil prices due to the region's significant contribution to global oil supply. Such events underscore the market's vulnerability to geopolitical instability and the swift reaction of oil prices to news suggesting potential supply threats.
2. OPEC+ Production Decisions
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, play a pivotal role in global oil markets through their production decisions. An announcement by OPEC+ to cut production usually leads to an increase in oil prices, as the market anticipates a tighter supply. Conversely, decisions to increase production can cause prices to drop. These actions directly influence market sentiment and volatility, illustrating the significant impact of OPEC+ policies on global oil markets.
3. Inventory Data Releases
Weekly inventory data from major consumers like the United States can lead to immediate reactions in the oil market. An unexpected increase in crude oil inventories often leads to a decrease in prices, reflecting concerns over demand or oversupply. Conversely, a significant draw in inventories can lead to price spikes, as it may indicate higher demand or supply constraints. These inventory reports are closely watched by market participants as indicators of supply-demand balance, affecting trading strategies and market volatility.
Each of these events has the potential to cause significant movements in WTI Crude Oil prices, affecting the strategies of traders and investors alike. By closely monitoring these developments, market participants can better anticipate volatility and adjust their positions accordingly, highlighting the importance of staying informed on current events and their potential impact on the market.
Technical Analysis Tools: Bollinger Bands and the 14-Day ADX
A sophisticated approach to navigating the fluctuating markets of WTI Crude Oil could involve the combined use of Bollinger Bands and the 14-day Average Directional Index (ADX). While Bollinger Bands measure market volatility and provide visual cues about the market's overbought or oversold conditions, the ADX offers a unique perspective on market momentum and trend strength.
The 14-Day ADX is pivotal in assessing the strength of a trend. A rising ADX indicates a strengthening trend, whether bullish or bearish, while a declining ADX suggests a weakening trend or the onset of a range-bound market. For options traders, particularly those interested in the long strangle strategy, the ADX provides valuable information. A low or declining ADX signals a weak or non-existent trend.
Bollinger Bands® serve as a dynamic guide to understanding market volatility. In this case an idea could be to apply Bollinger Bands® to the 14-Day ADX values instead of the WTI Crude Oil Futures prices. When combined, a pierce of the lower Bollinger Bands®, may suggest an opportune moment to establish a long strangle position in anticipation of a forthcoming breakout while options prices may be underpriced.
This combined approach allows traders to fine tune their entry and exit points. By waiting for the ADX to signal a nascent trend and Bollinger Bands to indicate a period of low volatility, traders can position themselves advantageously before significant market movements.
Strategizing with Bollinger Bands and ADX: In the dance of market analysis, the interplay between the ADX and Bollinger Bands choreographs a strategy of precision. Traders can look for moments when the market is quiet and options are underpriced. This dual-focus approach maximizes the potential of entering a long strangle options trade at the most opportune time, aiming for potential gains from subsequent volatility spikes in the WTI Crude Oil market.
Strategies for Trading WTI Crude Oil Options
In the volatile landscape of WTI Crude Oil trading, strategic agility is paramount. One strategy that stands out for its ability to harness volatility is the long strangle. This strategy is especially relevant in periods of low implied volatility (IV), providing traders with a unique opportunity to capitalize on potential market shifts without committing to a specific direction of the move.
Understanding the Long Strangle
The long strangle options strategy involves purchasing both a call option and a put option on the same underlying asset, WTI Crude Oil in this case, with the same expiration date but at different strike prices. The call option has a higher strike price than the current underlying price, while the put option has a lower strike price. This setup positions the trader to profit from significant price movements in either direction.
The beauty of the long strangle lies in its flexibility and the limited risk exposure it offers. The total risk is confined to the premiums paid for the options, making it a controlled way to speculate on expected volatility. This strategy is particularly appealing when the IV of options is low, implying that the market expects calm but the trader anticipates turbulence ahead.
Risk Management and the Importance of Timing
Risk management is a critical component of successfully implementing the long strangle strategy. The key to minimizing risk while maximizing potential reward is timing. Entering the trade when IV is low—and, consequently, the cost of options is relatively cheaper—allows for greater profitability if the anticipated volatility materializes and the price of the underlying asset moves significantly.
The Implications of a Limited Risk Strategy
A limited risk strategy like the long strangle ensures that traders know their maximum potential loss upfront—the total amount of premiums paid. This predefined risk exposure is particularly advantageous in the unpredictable oil market, where sudden price swings can otherwise lead to substantial losses.
Moreover, the limited risk nature of the long strangle allows traders to maintain a balanced portfolio, allocating a portion of their capital to speculative trades without jeopardizing their entire investment. It's a strategic approach that leverages the inherent volatility of WTI Crude Oil, potentially turning market uncertainties into opportunities.
Case Studies: Real-world Applications of the Long Strangle in WTI Crude Oil Trading
In the ever-volatile world of WTI Crude Oil trading, several events have starkly highlighted the efficacy of the long strangle strategy. These case studies exemplify how sudden market movements, driven by unforeseen news or geopolitical developments, can provide significant opportunities for prepared traders. Here, we explore instances where shifts in volatility facilitated lucrative trades, underscoring the potential of strategic options plays.
Case Study 1 : Geopolitical Escalation in the Middle East
Event Overview: An unexpected escalation in geopolitical tensions in the Middle East led to concerns over potential supply disruptions. Given the region's pivotal role in global oil production, any threat to its stability can significantly impact crude oil prices.
Trading Strategy: Anticipating increased volatility, traders employing the long strangle strategy before the escalation could imply significant gains. As prices surged in response to the tensions, the value of a strangle would have potentially increased.
Case Study 2 : Surprise OPEC+ Production Cut Announcement
Event Overview: In a move that caught markets off-guard, OPEC+ announced a substantial cut in oil production. The decision aimed at stabilizing prices instead triggered a sharp increase in volatility as traders scrambled to adjust their positions.
Trading Strategy: Traders with long strangle positions in place could have capitalized on the sudden price jump.
Case Study 3 : Major Hurricane Disrupts Gulf Oil Production
Event Overview: A major hurricane hit the Gulf Coast, disrupting oil production and refining operations. The immediate threat to supply lines led to a spike in oil prices, reflecting the market's rapid response to supply-side shocks.
Trading Strategy: The long strangle strategy could be invaluable for traders who had positioned themselves ahead of the hurricane season. The abrupt increase in crude oil prices following the hurricane highlighted the strategy's advantage in situations where directional market movements are expected but their exact nature is uncertain.
Conclusion
These case studies illustrate the practical application of the long strangle strategy in navigating the tumultuous waters of WTI Crude Oil trading. By strategically entering positions during periods of low implied volatility, traders can set themselves up for success, leveraging market movements to their advantage while maintaining a controlled risk profile. The key takeaway is the importance of vigilance and readiness to act on sudden market changes, employing comprehensive risk management practices to safeguard investments while exploring speculative opportunities.
The essence of trading in such a dynamic market lies not just in predicting future movements but in preparing for them through well-thought-out strategies and an acute understanding of market indicators and global events. The long strangle options strategy, with its limited risk and potential for significant returns, exemplifies this approach, offering a compelling method for traders aiming to capitalize on the inherent volatility of WTI Crude Oil.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
a daily price action after hour update - oilGood evening and i hope you are well.
wti crude oil
This chart is obviously the hardest because big trading range for a long time where market is absolutely neutral and both sides have all the arguments for their case.
bull case: Strong enough rally to 78 and they want to print 80 for a higher high. They will probably give up below 75.5 and try again around 70. Again.
bear case: Bears did what they had to and kept it under last weeks high to form a lower high. They now need follow through below 75.5 to make a lower low and that’s where the stop for most bulls is and another short signal for the bears.
short term: down - invalid above 79.3
medium-long term: sideways until clear break of range between 70-80
trade of the day: shorting the double top with yesterdays high 78.47 and adding on to shorts on pullbacks. 15m 20ema was money today
a daily price action early hour update - oilGood morning and i hope you are well.
wti crude oil
bull case: Bulls still have the 80 target in sight and they are buying all pullbacks. The uptrend is weakening but i think then can get there. The 1h 20ema is holding pretty good and we are right at it. So it's a buy. The drawn wedge could get us there but bulls have more trend lines below which can hold. Last time bulls got near 79, bears surprised and trapped many late bulls. I don't expect something different for now.
Invalid below 77.
bear case: Bears look at higher timeframes and it's a big trading range. We are in the upper third and they sell the highs because they made money the last times they did it. Until bulls get consecutive big bull bars above 80, odds favor a continuation of this trading range 70-80. I doubt bears will die defending 78/79 and we will probably at least reach last weeks high 77.29 or 80 before more profit taking by the bulls and shorting by the bears unfold.
short term: up to 79/80 before sideways to down
medium-long term: Sideways until clear break of range between 70-80
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 FUTURES Day Trading Analysis 📋On Crude OIL is nice to see strong buying reaction from the price 74 , there is nice to see strong volume area....
Where is lot of contract accumulated...
I thing that buyers from this area will be defend this long position...
and when the price come back to this area, strong buyers will be push up the market again...
Uptrend + Volume cluster are my mainly reason for this long trade....
Happy trading
Dale
Coffee Dxy Oil2.12.24 I thought the dollar would correct lower and it did but it could only go to a support area and then it found some buyers... so if I'm looking for the metals to go higher because the dxy went lower we're going to have to wait for some new bars. This is no big deal. Likewise, I thought that oil would go lower and it did But it tested a potential support area.... so we talked about that. I decided to talk about coffee because he gave me a chance to frame the chart and to show you that I would be looking at a range box to help me decide with any trade decisions and that this could be a tradable market because the vertical range of a range box makes it a viable trade as a buyer or a seller depending on trade location. If you can find a good range box with a decent vertical range, Don't be disappointed by this because it's not trending... these range boxes can set up to give you very nice reversal patterns it may be shorter term but they can give you nice rewards as a buyer and a seller.
CrudeOil**CrudeOil:**
The lower line of the channel acted as support, causing a continuous rise throughout the week.
This week we have resistance at the EMA200, with a retracement back to the lower price of the channel. There is a strong possibility of breaking the channel and making new lows at 72.40.
CL/WTI Bearish Divergence on 1hr chart - Sell Below Higher LowHourly Chart Bearish Divergence
Sell Stop below the HL with target TP set to
0.5 fib level of the move and Stop Loss above the highs
1:1 RR Trade
A review of last week's oil chart2.10.24 If you're serious about learning a techniques that I'm showing here, I think it's important to go back and look at the videos on oil over the past week. this is because I'm using most of the tools that I use most the time, and I made some conclusions about how the market would transition into an acceleration if certain things happen... and this is based on my experience with changes in Market Behavior and how markets change for buyers and sellers. I'm not the only one that knows this.... this works because large numbers of people know these patterns even it's only intuitively. This is not intuitive if you're just starting out. In addition, Things happen as the markets moving and you have to modify your plan from time to time to accommodate these changes. and the more you learn to do this the better you will get at this. You really have to
Recreate the patterns on your own chart or you will miss some of the important subtleties that can make a difference.
Oil to Clear 79.00 Big FigCurrently watching Crude Futs (NYMEX) to clear an Intermediate term High at 79.00 Big Fig.
As my mentor says...
"To & Through"
Reasons:
Crude Bullish Seasonally until march/April (Possible Quarterly Shift to downside)
Commercials Net LONG
DXY Bullish
Failed to break lower on Daily (Indicating to me higher prices are in order)
HTF MMSM, however Long in play to clear Buyside before reversing above highs & clearing distribution leg Sellside
HTF (Daily):
Expecting BSL to be ran and staying Bullish until trend broken & IOF Turns Bearish (Should happen above Highs)
H4:
Expecting a retracement into Internal Range Liquidity as outlined to target External Range Liquidity (Markets are booked like this, in a form of "Handshaking")
LTF:
Tuesday Feb 13th: US CPI
Weds Feb 14th: US Crude Oil Inventories
If Bias is correct and Weekly candle is due to expand to upside, I'd be looking for Tuesday to Form Weekly Low & take Longs Wednesday NY IF my model plays out.
Crude Oil Weekly forcast There is a good possibility of a good rise in Crude Oil next week, because a trend is being seen on the daily chart of Crude Oil, and with the support of this trend, Crude Oil is moving towards the 50-day Simple Moving Average, as well as Crude Oil It is also getting strong support from the 100 day simple moving average. But it should also be kept in mind that crude oil decides its direction according to many developments happening at the global level.
Crude on Monthly Support : Long entry.CRUDE on Monthly support, seems like holding it, safe traders may wait for trendline breakout, risky may enter with SL below support.
Levels on chart.
-View for education purpose only.
Saptarish Trading.
Crude Oil ReverseAfter a scary downside week the crude i anticipate for a 4% bounce back to 75$.
The fundamentals are mixt base on the empty words ceasefire between Israel and Palestina with had also a impact in moving the price down. But over the weekend US have stike as response to Iran Attack witch may cause an impact in creating big moves. Should we not forget the OPEC meeting were the hold the cutting production plan in March.
Technicaly after a big fall comes a small bounce. The indicators and the upper trend tell us that the price can consolidate at 70-72 range. The bounce will show us how the players are betting this week after a strong US economical reports.
Buy 72.33$
TP1 74$
TP2 75$
SL 71$
Good luck guys!
