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U.S. oil prices will continue to rise on March 14th. As the four major inventories continue to decrease. U.S. oil continues to rise. WTI quotation as of closing: 79.153 U.S. API crude oil inventories for the week to March 8 (10,000 barrels) (-5.221 million barrels) U.S. EIA Cushing, Oklahoma crude oil inventories for the week to March 8 (-1.536 million barrels) EIA crude oil inventories in the United States for the week to March 8 (-220,000 barrels) EIA Cushing, Oklahoma crude oil inventories in the United States for the week to March 8 (596,000 barrels) BLACKBULL:WTI FPMARKETS:WTI BLACKBULL:WTI NYMEX:WTI1! MATBAROFEX:WTI1! There are good motivations for the rise in oil prices. At the beginning of the Asian market, oil was stable above 79. Judging from short-term trends, market demand continues to increase due to the spread of geopolitics. It is expected to continue to rise above 80. At the same time, OPEC countries have also decided to reduce production. If there is no physical fall below 79 in the short term, you can directly buy. If the body falls sharply and falls below 79. We can buy near 78.6 in the second position personal suggestion: 79.-79.3 buy. sl78.TP80.6 The transaction price is based on the real-time price of TradingView. When you are not a member and follow the above operations, remember to control risks.
BLACKBULL:WTILong
by T0_messenger
WTI Crude Oil Price Analysis: Trends, Tensions, and TurnaroundsThe WTI light crude oil benchmark is currently navigating a complex landscape, trading around $83.50 amidst a convergence of factors influencing its trajectory. At present, the market finds itself within a critical juncture, characterized by the interplay of supply dynamics, geopolitical tensions, and currency movements. Recent market movements have seen WTI prices facing downward pressure, largely attributed to the resurgence of the US Dollar (USD) and unexpected increases in US crude and gasoline inventories. The hawkish remarks from US Federal Reserve Governor Christopher Waller have bolstered the Greenback, signaling a cautious approach towards interest rate adjustments. Consequently, a stronger USD renders dollar-denominated oil more expensive for foreign investors, thereby curbing demand and exerting downward pressure on WTI prices. Moreover, the Energy Information Administration's (EIA) report revealing a surprising build-up in US crude inventories further compounded the bearish sentiment surrounding WTI prices. This unexpected uptick in stockpiles added to the downward pressure on prices, reflecting a delicate balance between supply and demand dynamics in the market. Despite these bearish indicators, the geopolitical landscape presents a contrasting narrative. Escalating tensions in the Middle East and the ongoing conflict between Russia and Ukraine have injected a degree of uncertainty into global oil markets. The intensified attacks on Russia's oil infrastructure by Ukraine, coupled with ongoing geopolitical unrest, have the potential to disrupt global supply chains and mitigate the downward pressure on WTI prices. Amidst this backdrop, market analysts are closely monitoring key technical indicators for potential market reversals. The presence of an H4 supply area, coupled with the formation of a possible Double Top pattern and overbought conditions signaled by the Relative Strength Index (RSI), suggests the possibility of a reversal in WTI prices. However, the outcome remains uncertain, contingent upon the interplay of market forces and geopolitical developments in the coming days. In conclusion, the WTI crude oil market is navigating a complex web of factors, encompassing supply dynamics, geopolitical tensions, and currency fluctuations. While bearish indicators weigh on prices, geopolitical uncertainties and technical signals hint at the potential for a market reversal. As market participants continue to monitor developments, the future trajectory of WTI prices remains subject to ongoing market dynamics and geopolitical events.
ICMARKETS:XTIUSDShort
by FOREXN1
1
Options Blueprint Series: Perfecting the Butterfly SpreadIntroduction to the Butterfly Spread Strategy A Butterfly Spread is an options strategy combining bull and bear spreads (calls or puts), with a fixed risk and capped profit potential. This strategy involves three strike prices, typically employed when little market movement is expected. It's an excellent fit for the highly liquid energy sector, particularly CL WTI Crude Oil Futures Options, where traders seek to capitalize on stability or minor price fluctuations. Understanding CL WTI Crude Oil Futures Options WTI (West Texas Intermediate) Crude Oil Futures are one of the world's most traded energy products. These futures are traded on the NYMEX and are highly regarded for their liquidity and transparency. The introduction of Micro WTI Crude Oil Futures has further democratized access to oil markets, allowing for more granular position management and lower capital requirements. Key Contract Specifications for Crude Oil Futures: Standard Crude Oil Futures (CL) Contract Size: Each contract represents 1,000 barrels of crude oil. Price Quotation: Dollars and cents per barrel. Trading Hours: 24 hours a day, Sunday-Friday, with a 60-minute break each day. Tick Size: $0.01 per barrel, equivalent to a $10.00 move per contract. Product Code: CL Micro Crude Oil Futures (MCL): Contract Size: Each contract represents 100 barrels of crude oil, 1/10th the size of the standard contract. Price Quotation: Dollars and cents per barrel. Trading Hours: Mirrors the standard CL futures for seamless market access. Tick Size: $0.01 per barrel, equivalent to a $1.00 move per contract. Product Code: MCL Options on Crude Oil Futures : Options on WTI Crude Oil Futures offer traders the ability to hedge price risk or speculate on the price movements. These options provide the flexibility of exercising into futures positions upon expiration. Constructing a Butterfly Spread The essence of a Butterfly Spread lies in its construction: It involves buying one in-the-money (ITM) option, selling two at-the-money (ATM) options, and buying one out-of-the-money (OTM) option. For CL WTI Crude Oil Futures Options, this could translate into buying an ITM call or put, selling two ATM calls or puts, and buying an OTM call or put, all with the same expiration date. The goal is to profit from the premium decay of the ATM options faster than the ITM and OTM options, especially as the futures price gravitates towards the middle strike price. Using call options would typically generate positive delta making the strategy slightly bullish. Using put options would typically generate negative delta making the strategy slightly bearish. Selection of Strike Prices: Identify suitable ITM, ATM, and OTM strike prices based on current crude oil futures prices and expected market movement. (The below chart example uses Support and Resistance UFO price levels to determine the optimal Strike Selection.) Determine Expiration: Choose an expiration date that balances time decay with your market outlook. Manage Premiums: The premiums paid and received for these options should result in a net debit, establishing your maximum risk. Advantages and Risks Advantages: Defined Risk: The maximum potential loss is known at the trade's outset, limited to the net debit of establishing the spread. Profit Potential: Profits are maximized if the futures price is at the middle strike at expiration. Flexibility: Suitable for various market conditions, especially in a range-bound market. Risks: Limited Profit: The strategy caps the maximum profit, which is achieved under very specific conditions. Commission Costs: Multiple legs mean higher transaction costs, which can erode profits. Complexity: Requires careful planning and monitoring, making it less suitable for novice traders. The construction of a Butterfly Spread in the context of CL WTI Crude Oil Futures Options highlights the strategic depth required to navigate the volatile energy market. Meanwhile, understanding its advantages and inherent risks equips traders with the knowledge to apply this strategy effectively, balancing the potential for profit against the complexity and costs involved. Market Scenarios and Butterfly Spread Performance The performance of a Butterfly Spread in CL WTI Crude Oil Futures Options is highly contingent on market stability and slight fluctuations. Given crude oil's propensity for volatility, identifying periods of consolidation or mild trend is crucial for this strategy's success. Neutral Market Conditions: Ideal for a Butterfly Spread, where prices oscillate within a narrow range around the ATM strike price. Volatility Impact: Sudden spikes or drops in crude oil prices can move the market away from the strategy's profitable zone, reducing its effectiveness. Understanding these scenarios helps in planning entry and exit strategies, aligning them with expected market movements and historical price behavior within the crude oil market. Executing the Strategy Executing a Butterfly Spread involves precise timing and adherence to a pre-defined risk management plan. The entry point is critical, often timed with expected market stagnation or minor fluctuations. Entry Criteria: Initiate the spread when volatility is expected to decrease, or ahead of market events predicted to have a muted impact. Adjustments: If the market moves unfavorably, adjustments can be made, such as rolling out the spread to a further expiration or adjusting strike prices. Exit Strategy: The ideal exit is at expiration, with the futures price at the ATM option's strike. However, taking early profits or cutting losses based on predefined criteria can optimize outcomes. Case Study: Applying Butterfly Spread to Crude Oil Market Let's explore a hypothetical scenario where a trader employs a Butterfly Spread in anticipation of a stable WTI Crude Oil market. The futures are trading at $80.63 per barrel. The trader expects the price to move down slowly due to mixed market signals even though key support and resistance (UFOs) price levels would indicate a potential fall. As seen on the below screenshot, we are using the CME Group Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts. Underlying Asset: WTI Crude Oil Futures or Micro WTI Crude Oil Futures (Symbol: CL1! or MCL1!) Strategy Setup: Buy 1 ITM put option with a strike price of $82.5 (Cost: $3.00 per barrel) Sell 2 ATM put options with a strike price of $78 (Credit: $0.92 per barrel each) Buy 1 OTM put option with a strike price of $73.5 (Cost: $0.24 per barrel) Net Debit: $1.40 per barrel ($3.00 - $0.92 - $0.92 + $0.24) Maximum Profit: Achieved if crude oil prices are at $78 at expiration. Maximum Risk: Limited to the net debit of $1.40 per barrel. Over the following days/weeks, crude oil prices could fluctuate mildly due to competing factors in the market but ultimately close at $78 at the options' expiration. The trader's maximum profit scenario is realized, demonstrating the strategy's effectiveness in a stable market. Risk Management Considerations Executing a Butterfly Spread or any options strategy without a robust risk management plan is perilous. The following considerations are essential for traders: Use of Stop Loss Orders: To mitigate losses in unexpected market moves. Hedging: Employing alternative positions to protect against adverse price movements. Defined Risk Exposure: Always know the maximum potential loss before entering any trade. Market Analysis: Continuous monitoring and analysis of the crude oil market for signs that may necessitate strategy adjustment. Conclusion The Butterfly Spread is a nuanced strategy that, when applied carefully, can offer traders of CL WTI Crude Oil Futures Options a means to capitalize on relatively slow market moves. While the potential for profit is capped, so is the risk, making it an attractive option for those with a precise market outlook. It exemplifies the strategic depth available to options traders, allowing for profit in less volatile market conditions. 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.
NYMEX:CL1!Education
by traddictiv
A Renko Trading Strategy with Multiple IndicatorsThis study will walk through several concepts in analyzing crude oil. The primary chart type will be a Renko chart with the block size (ticks) set to 25 (0.25 in TV) and with a timeframe set to 15 minutes. The significance of timeframe is that in TV, it will take this amount of time for the price to maintain a full block change (25 cents) in order for it to be ‘printed’. In times of high volatility, a 15-minute window can allow for more than one block to print at the same time. While this may be a disadvantage in trading CL futures either day or swing trading, it helps filter out noise in the type of trading I do. The basic strategy I’m wanting to establish using this setup is the buying of options, either puts or calls, that are as near to the market as possible and to limit risk to a % of the value of the purchase price of the option. So, for example, if I pay $2,500.00 USD for a CLQ24 85 Call, I will limit my loss to 10% of that price should the market go against what I had expected. The chart setups and scenarios in this study will be based on Renko charts along with various indicators that will be discussed (for the most part individually). A view of 2024 based on the Renko setup. I will start with this basic view that has the Renko chart configured as outlined above with two linear regression drawings manually drawn on it. There is an indicator for LR which will follow each block change and change accordingly based on the lookback configuration. With the drawing tool, you can start and end the LR based on your strategy. In mine, I want to base the LR on price from a major low to a major high and then adjust based on if a new high or low is obtained. In this chart, I picked the low as that of late December (the first long black arrow). As an exercise, you can hit the new highs from this point to see how the LR adjusted and how future price flowed within it. There are two LR drawings on this chart; one with an upper and lower deviation set to 2/-2 and the second with a upper and lower deviation set to 1/-1 (these are the ones with dots for a boundary). In this specific chart, I’ve started with the latest high to be that on 01-March and with the LRs both extended to the right, you can see the price movement against these LR into the future. As price broke through the top of the LR recently, a new high was put in on 24-March and the adjustment of the LR will be shown next. With this new high confirmed, the LRs are both move to end at this high while keeping the original starting point the same. In this view, price pulled back to the top of the LR 1std and close here. With the LR extended, you can see where the mean is and a potential price target if just considering the LR itself. An expanded view of above: Next, I’ll introduce the DEMA and simple MA on the chart. There are two DEMAs added to the chart with one set to a period of 12 and one set to a period of 20. The significance of the two is that when the 12 (black on this chart) is above the 20 (red on this chart), then the trend is bullish and when the opposite, the trend is bearish. I use these two more for confirmation than for timing. If you study these, you’ll see that they lag for the most part but there are key times that they will provide insight to the direction of a market during times of consolidation. The next two indicators that I’ll introduce are the Stochastic and Directional Movement Index (DMI with the ADX). The experience of using these indicators on a Renko chart is like that on a candle chart except that the period is not for time but the number of bars that have been printed or committed. There are two Stochs used (5,3,3 and 25,3,3). The intent of the 5,3,3 is to provide a fast-moving change in momentum while the 25,3,3 is designed to provide insight to the momentum of the longer trend. Insight as to timing the entry and exit of trades may be possible with an in-depth understanding of the crossover of the 25,3,3 between the %k and the %d. The DMI can be used like it is against a candle chart but with settings at 5,5. This provides a faster moving indicator and, with some study, can determine the importance of the interactions between the 3 lines. There is one key aspect of this indicator with the Renko that works similar to the candle and that is of identifying pending consolidation of the market. In a traditional setup of the DMI on a candle chart, the settings are 14,14 and the line of 20 in the indicator is traditionally the line of strength. Meaning that when the ADX falling at or below the 20 line, then the trends are weak and the market is entering consolidation. During this time, the guidance from various sources is to look for patterns on the market and signs of a breakout. For the Renko charts, the are to watch for trend strength and consolidation is between the 35 and 20 area based on the analysis I’ve done. On the following chart, I’ve highlighted some of these areas of consolidation. Additionally, there is a notion of a high-swap of the +/-Dis which is when price has started moving strongly in one direction and then pivots to change direction and build into a strong trend from this. While in hindsight these look compelling, they can be difficult to trade in real-time, it’s difficult to differentiate between a high-swap and a future degradation of the trend that leads to consolidation. I think that the more reliable setup is finding the longer points of consolidation and prepare to trade in the breakout direction. As you can see on the close Friday, price has moved off of a new recent high and could now be trending down into a period of consolidation (if one were to use just the combination of the DMI and ADX). If you’ve not read “Secrets of a Pivot Boss” by Franklin O. Ochoa, I would encourage you to do so as it has many extremely valuable and innovative ideas in trading off volume, value, and pivots. The following discussions will be based on concepts from this book. The first covered will be that of volume area. I will not dig into the specifics of this but to just show one of the many indicators available in TradingView for these concepts. The volume indicators will work with Renko charts and the specific one I’m using allows me to set the increment of volume based on rows or ticks. I’ve chosen ticks and set the number to 5. With a 25 tick Renko chart, this will allow for a granularity of 5 rows per block for displaying the volume profile. In the chart below, I’ve highlighted a concept outlined in the book of the volume area that is extended out to the next trading day and is what forms the basis for 2-day volume area analysis. There are 6 scenarios that go with this analysis and the pink channels on the chart are intended to enable this view. The volume profile I’ve picked in the indicator is for the week so the analysis I do is for the week and not daily. One of the key setups from the book is an ‘inside day’ which you can see at the black arrow. An inside day is a day to watch for breakout (in this case it would be an inside week) and, after support was found, the price went higher. The last set of indicators that I’ll cover is the Camarilla Pivots. These too are covered in depth in the book referenced above as well as a wealth of details on the web. These pivots do not work on Renko charts so I will create a candle chart with an 8hr setting and then set up the monthly and yearly pivots on it. From this chart, I’ll copy key lines over to the Renko chart. This first chart is a view of the 25 tick, 15 minute chart going back to the beginning of 2024. I’ve labeled some of the key lines on this chart for both the year 2024 and the month of March. This is zoomed into the month of March. I believe a key concept that makes these pivots on the Renko with the timeframe powerful is the ability to see the tests that happen around the various pivots for both support and resistance. There is an entire trading strategy that is outlined in the book referenced above. The current price action seems to imply that price should come back to either the March R3 or the 2024 R3 (which is also the top of the value area for 2023). If price action does come back to these lines, careful attention should be paid to how support plays out and if a buying or selling opportunity arises from it. Next, I’ll provide a view with all of the reviewed items in one view. I’m standing aside on trading this for now until the current price action plays out and a cleaning view of potential trade comes into focus. Some observations considering what’s been discussed individually in this study: The DEMA is currently swapped to the bearish trend. The -DI is over the +DI which is a bearish trend. However, The ADX has been dropping to the 35 line but has not dropped in the 35 to 20 range to indicate a consolidation phase. The Stoch has not completely bottomed out long term and could see more downward movement. While price is at the top of the 1std of the LR, it could drop further. A drop and hold of the 2024 R3, March R3, top of the 2023 volume area, and the median of the current LR (all would be within proximity of each other) could be a strong buy setup. A break below these lines with an ensuing test from the bottom could be a strong sell setup. The relationship of the past two weeks’ volume area is bullish.
NYMEX:CL1!Education
by mxb1961
Breakout for crude oil in focusCrude oil has been grinding higher since the December low, but after a 4-week period of choppy trade momentum has turned higher. Whilst $80 has been a tough level to crack in recent week, we suspect a breakout is now on the cards - 200-day MA has provided dynamic support - Falling wedge into 200-day MA - Bullish range expansion out of the falling wedge - RSI (14) curling higher from the neutral zone (50) Prices are teasing the $80 level during a quiet Asian session. Bulls could either look to enter the breakout above $80 alongside rising volume, or seek dips down to the $79 handle / 2023 open price in anticipation of a breakout. The bias remains bullish above the $200-day MA with $84 now in focus
NYMEX:CL1!Long
by CityIndex
Crude Oil Price Analysis: Implications of Recent EventsIn the H4 timeframe, US Crude Oil prices started the week with a bearish candle, contrasting with the strong gains seen in the previous week. This bearish sentiment seems to be influenced by multiple factors, including technical indicators such as the 61.8% Fibonacci level and overbought stochastic conditions, particularly around the $81.50 mark. The recent disturbances, including Houthi attacks in the Red Sea and increased drone strikes on Russian oil refineries by Ukraine, have added volatility to the market. Additionally, Israeli Prime Minister Benjamin Netanyahu's announcement to push into Gaza's Rafah enclave has further fueled concerns. Despite these geopolitical tensions, the decision by OPEC+ members to extend production cuts of 2.2 million barrels per day through the second quarter has contributed to worries about a tight global supply. This has acted as a catalyst for Crude Oil prices. Looking ahead, the market is closely monitoring the Federal Reserve's stance on interest rates. Expectations that the Fed will maintain higher rates for an extended period may dampen economic activity and fuel demand, potentially impacting Crude Oil prices. However, the overall fundamental backdrop remains supportive for bullish traders, suggesting that any corrective pullbacks could be viewed as buying opportunities. In conclusion, while the opening bearish sentiment in US Crude Oil prices raises questions about short-term direction, the broader outlook remains bullish. Investors should remain vigilant for potential buying opportunities amid the prevailing geopolitical tensions and supply concerns. Daily setup:
TVC:USOILShort
by FOREXN1
1
Oil continues to ascend within the upward-sloping channelWest Texas Intermediate crude oil regained a bullish momentum and managed to establish a new high at $81.58, which marks the highest value in over four months. Additionally, RSI, MACD, and Stochastic all moved higher on the daily chart. These developments are positive for oil and bolster a bullish case in the short term and medium term. However, while it is possible that oil might reach $85 per barrel (or perhaps even $90, depending on the global economy, oil supply/demand dynamics, and the situation in the Middle East), we are skeptical about such high price tags as $100 per barrel in the coming months. In our opinion, the United States will continue to ramp up its production against OPEC, which is trying to balance the market by cutting its own production quotas. Furthermore, the declining industrial and manufacturing production in Europe and the United States is likely to continue holding a lid over rising oil prices. Consequently, at the moment, we see very limited upside for oil. Illustration 1.01 Illustration 1.01 shows the ADX’s daily chart, which reflects the trend’s momentum. Yellow arrows indicate a temporary decline in momentum ahead of the OPEC’s monthly report and subsequent awakening after the report. Illustration 1.02 The image above shows the daily chart of USOIL and simple support/resistance levels derived from past peaks and troughs. Technical analysis Daily time frame = Bullish Weekly time frame = Bullish Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
TVC:USOILLong
by Tradersweekly
2
In the short and medium term, WTI is mainly bought. Due to delays in production cuts by OPEC countries. Oil experienced a slight decline, but some Arab countries decided to reduce production. So oil formed some support after a brief decline. As a resource product. To a certain extent, supply is also lower than demand, and the other is the promotion of geopolitics, so the operation is still based on buying at low prices. The club already has live signals announced. In the mid-term, buying is also the main focus.
BLACKBULL:WTILong
by T0_messenger
WTI OIL (USOIL) Technical AnalysisUpon examining the WTI (West Texas Intermediate) crude oil chart, we observe a robust bullish trend, accompanied by a retracement to the 78.6% Fibonacci level. This significant pullback warrants attention, as price action appears poised for a deeper correction. In our analysis, we consider historical price swings, taking into account seasonality patterns from previous years at the same time. By doing so, we explore the likelihood that institutional players may be positioning themselves to drive prices lower, targeting liquidity zones below previous support levels. Additionally, an imbalance is evident on the 4-hour timeframe. Disclaimer: This technical analysis serves as an opinion and should not be construed as financial advice. Traders and investors should conduct their due diligence and seek professional counsel before making any trading decisions.
TVC:USOIL
by fxtraderanthony
WTI momentum play shortGlossary: VA – Value Area Liq.P – Liquidity Point PiPo – Pivot Point BO – Break-Out H1 – Hourly Time-frame M15 – 15min Time-frame LTF – Lower Time-frame HTF – Higher Time-frame Magenta horizontal Ray – Area of Interest Magenta rectangle – Gap / Area of Significance *********** Momentum run play to the previous low around 76.07 Price finished a 3-touch structure into the Liq.P at 79.79 and started to reverse. The H4 shows a strong impulsive move back into structure and is now starting to consolidate. Waiting for a continuation flag on the H1, preferably with a small pull-back for an entry short.
OANDA:WTICOUSDShort
by kalganid
USOIL getting positioned for more gains? Yesterday, OPEC and its allies announced plans to extend a voluntary oil production cut of 2.2 million barrels per day through June 2024. Currently, the USOIL trades near $80.20 per barrel, and its structure is undergoing a significant change. Since late November 2023, the USOIL has traded predominantly sideways between $70 and $80 per barrel. However, last week, it broke above the resistance at $79.25 and established a new high in more than three months. By doing so, the USOIL formed an ascending channel, which is a bullish structure. In addition to that, the ADX started to tick slightly higher on the daily chart, suggesting the trend might be gaining bullish momentum. On top of that, technical indicators (on the daily chart), including RSI, MACD, and Stochastic, all turned to the upside, which is yet another bullish sign. Finally, it looks like the USOIL might be awakening and getting positioned for more gains in the short-term and medium-term future. Illustration 1.01 While OPEC and its allies are cutting oil production, the United States is doing the opposite; in fact, the U.S. crude oil production rose approximately 10% in 2023. Technical analysis Daily time frame = Bullish (weak trend) Weekly time frame = Neutral Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
TVC:USOILLong
by Tradersweekly
6
Futures market backwardation suggests a sluggish outlookDefying our expectations, the West Texas Intermediate crude oil rose above $75 and began to form a rectangle pattern between $76.16 and $79.25 (following a breakdown of negotiations between Israel and Hamas). Currently, the USOIL is trading near the lower bound of this range, which also coincides with the 20-day SMA that acts as an alternative support level. On the daily timeframe, the MACD performed a bearish crossover, and RSI with Stochastic reversed to the downside. Simultaneously, the ADX continued lower, indicating a lack of any trend. Yet, despite that, the futures contracts continue to trade backward, which suggests the market’s sluggish outlook for the oil’s future price. Illustration 1.01 Illustration 1.01 shows the USOIL’s daily chart and simple support/resistance levels. Illustration 1.02 The MACD line and signal line performed a bearish crossover. However, they are still within the bullish area above the midpoint. Technical analysis Daily time frame = Neutral Weekly time frame = Neutral Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.
TVC:USOIL
by Tradersweekly
A Renko Trading Strategy - Part 7Part 7: Some Examples of Analysis with Indicators First, let’s look at some of the key indicators that are included in the charts. Regardless of the brick size (10,25, or 50), all charts will have the same configuration. DEMA (12-period and 20-period) : These moving averages are designed to react more quickly to price changes than a traditional simple moving average (SMA). The 12-period DEMA is black, and the 20-period DEMA is red. We would look for the 12-period DEMA to cross above the 20-period as a potential bullish signal and below as a bearish signal. As you examine the charts going forward, pay close attention to these two when comparing them to the dynamics of the brick patterns. SMA (20-period) with Blue Dots : This moving average is plotted with blue dots and provides a visual indication of the longer-term trend. It's smoother and slower to react to price changes compared to the DEMA. WMA (9-period) on the 20-period SMA (Purple Line) : The WMA is used to confirm trends and reversals. When the WMA is above the SMA, it may indicate an uptrend, and vice versa for a downtrend. In terms of support and resistance, Renko bricks make it easier to spot these levels as they smooth out minor price fluctuations. Support and resistance would be identified by areas where the price has repeatedly reversed direction. When comparing the 12 and 20-period DEMA to the Renko bricks, look for areas where the DEMAs act as dynamic support or resistance to the price action indicated by the bricks. Similarly, the 20-period SMA and the 9-period WMA would be assessed for their interaction with the Renko bricks. For breakout patterns, we would look for a consolidation of Renko bricks, indicated by a tight clustering of bricks without clear direction, followed by a breakout above or below this consolidation with a corresponding move in the moving averages. Let’s identify any notable patterns or signals on the chart. We will look for: Crossovers between the DEMAs The relationship between the DEMAs and the Renko bricks Potential support and resistance levels Any consolidation patterns that might indicate breakout points The Average Directional Index (ADX) is used to determine the strength of a trend. The value of 35 that is used is higher than the standard 20 or 25, which implies the reduced noise in Renko charts. Here’s how you might interpret the ADX in conjunction with the DI lines: Consolidation : If the ADX is dropping and has crossed below the 35 level, it may indicate that the trend strength is weakening, suggesting a period of consolidation or range-bound market. ADX Below DI Lines : When the ADX drops below both the +DI (positive directional indicator) and -DI (negative directional indicator), it further suggests that neither buyers nor sellers are in control, reinforcing the consolidation signal. Watching for a Trend Change : If after dropping, the ADX starts to turn upward while below the DI lines, it could be an early sign that a new trend is starting to form. The direction of the trend would be indicated by which DI line the ADX crosses. If it crosses the +DI, it may signal the start of an uptrend; if it crosses the -DI, a downtrend might be beginning. To apply this to your Renko chart, you would look for periods where the ADX dips below 35 and pay attention to its direction relative to the DI lines. You'd also consider the brick color change on the Renko chart for confirmation of trend direction if the ADX starts to rise after the dip. Keep in mind that technical indicators should not be used in isolation; they are more effective when used in conjunction with other analysis tools and techniques. Renko charts themselves filter out smaller price movements, so the ADX on a Renko chart might not react the same way as it would on a traditional candlestick chart. Here's some ideas on how to analyze and correlate the given indicators to price action: Renko Bricks : Renko charts focus on price changes that meet a minimum amount and filter out minor price movements, thus highlighting the trend over time. A 50-tick Renko chart will only print a new brick when the price moves by 50 ticks, thereby smoothing out minor fluctuations and making trends easier to spot. The 1-hour timeframe means that each brick represents an hour's worth of price movement. Linear Regression Channel (1st and 2nd degree) : This tool is used to identify potential support and resistance levels and the overall trend direction. The 1st degree (linear) regression trendlines show the mean price movement, while the 2nd degree could show a parabolic trend which accounts for acceleration in price movement. The price often oscillates around the mean trendline, and deviations can be used to identify overbought or oversold conditions. Double Exponential Moving Average (DEMA) 12 and 20 : The DEMA is a faster-moving average that reduces lag time compared to traditional moving averages. In your setup, the DEMA 12 would be more reactive to price changes, potentially serving as a short-term trend indicator, while the DEMA 20 could be used to confirm medium-term trends. Simple Moving Average (SMA) 20 with 9 period Weighted Moving Average (WMA) : The SMA 20 is a common indicator for medium-term trend direction. When combined with the 9-period WMA, which gives more weight to recent prices, you could use crossovers between the two as potential buy/sell signals. Stochastic Oscillators (5,3,3 and 50,3,3) : Stochastic oscillators compare the closing price of a commodity to its price range over a certain period. The 5,3,3 stochastic is a fast indicator that can signal short-term overbought or oversold conditions. The 50,3,3 stochastic, being much slower, could be used to assess the longer-term momentum of the market. Average Directional Index (ADX) with the Directional Movement Index (DMI) : The ADX is used to measure the strength of a trend, whether up or down. The DMI includes both the Positive Directional Indicator (+DI) and Negative Directional Indicator (-DI), which help determine the trend direction. A rising ADX indicates a strong trend, while a falling ADX suggests a weakening trend. When analyzing the chart, consider the following correlations and insights: Renko and Regression Channel : Look for periods when the Renko bricks consistently stay on one side of the mean regression line. This could indicate a strong trend. If the price breaks through the regression channel, it might signal a potential reversal or a breakout. DEMA, SMA, and WMA : Watch for crossovers between these moving averages. A crossover of the DEMA 12 above the SMA 20 and WMA might indicate a bullish short-term momentum, while a crossover below could signal bearish momentum. Stochastic Oscillators : Look for divergence between the price and the stochastic oscillators. If the price makes new highs/lows but the stochastic does not confirm (known as a divergence), it could indicate a weakening trend. ADX and DMI : If the ADX is rising and the +DI is above the -DI, the uptrend is strong; if the -DI is above the +DI, the downtrend is strong. If the ADX is falling, the trend is considered weak or the market may be ranging. For trade setups, you might consider the following: Long Entry : A new Renko brick in the direction of the trend, a bullish crossover in moving averages, the stochastic coming out of oversold territory, and a rising ADX with +DI above -DI. Short Entry : A new Renko brick opposite the trend direction, a bearish crossover in moving averages, the stochastic coming out of overbought territory, and a rising ADX with -DI above +DI. It's crucial to back test these indicators and their correlations with historical price data to validate their predictive power. Additionally, always manage risk appropriately, as indicators are not foolproof and should be used in conjunction with other forms of analysis and sound trading principles. Part 8: Working Through Some Examples to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 6Part 6: How to Incorporate a Stop/Loss Strategy Incorporating stop-loss strategies into trading using Renko charts and options involves careful consideration of market dynamics, the specific characteristics of options trading, and the unique aspects of Renko charts. Here are some approaches tailored to this trading strategy: 1. Setting Stop Losses Based on Renko Chart Reversal Renko Brick Reversals : Since Renko charts are designed to filter out minor price movements, a reversal (change in brick color) can be a significant indicator. For options trading, consider setting a stop-loss order if there's a reversal that contradicts your position. For instance, if trading calls based on an uptrend indicated by Renko charts, a stop-loss could be triggered by the appearance of a certain number (e.g., two or three) of consecutive red bricks, signaling a potential downtrend. Percentage of Option Value : Determine a percentage loss of the option's value that you're willing to tolerate (e.g., 30-50% of the premium paid). This approach requires monitoring the option's value relative to market movements and Renko chart signals. 2. Volatility-Based Stop Losses Average True Range (ATR) Adjustments : Although traditional Renko charts do not incorporate time or volume, you can use an additional indicator like the Average True Range (ATR) of the underlying futures contract to set volatility-adjusted stop losses. This method involves setting a stop loss at a point where the option's underlying asset moves against your position by an amount that is significant based on recent volatility, indicating the trend might not be as strong as anticipated. 3. Time-Based Exits Option Time Decay : For options, time decay (theta) is an important consideration. You might set a time-based stop-loss strategy where positions are evaluated for potential exit if there hasn't been favorable movement within a certain timeframe, considering the decay's impact on your option's value, especially as it approaches expiration. 4. Technical and Fundamental Stop Losses Renko Chart Patterns : If your Renko charts show pattern breakouts or breakdowns (e.g., failure of a breakout pattern you traded on), use these as a basis for stop-loss orders. Fundamental News: For commodities like crude oil, fundamental news (e.g., geopolitical events, supply changes) can dramatically impact prices. If such events occur and are likely to adversely affect your position, consider them as triggers for your stop-loss strategy. 5. Dynamic Stop Losses Adjust According to Market Conditions: As market conditions change, regularly review and adjust your stop-loss levels. This dynamic approach ensures that your strategy remains aligned with the current market environment and Renko chart developments. 6. Mental Stop Losses Disciplined Execution : While physical stop-loss orders placed with a broker are automatic, mental stop losses rely on the trader's discipline to execute a trade when certain conditions are met. This approach allows for flexibility in response to market conditions but requires strict adherence to predetermined exit criteria to be effective. Conclusion Creating stop-loss strategies for options trading based on Renko charts involves a blend of technical analysis, understanding of options' characteristics, and disciplined risk management. By combining Renko chart reversals, volatility adjustments, time-based considerations, and both technical and fundamental factors, traders can develop a comprehensive stop-loss strategy that protects against undue losses while allowing room for the natural ebb and flow of the markets. Regular review and adjustment of these strategies in response to market changes are crucial for maintaining their effectiveness. Part 7: Some Examples of Analysis to-follow
NYMEX:CL1!Education
by mxb1961
A Renko Trading Strategy - Part 5Part 5: Devising a Strategy Based on Buying Calls/Puts When trading crude oil (CL) using options like puts or calls, the strategy involving Renko charts and pattern recognition can be finely tuned for option trading. The choice between puts and calls will depend on the identified trend and pattern signals across the three brick sizes. Here are scenarios that illustrate when to buy puts or calls based on the described strategy: Scenario 1: Buying Calls Signal : All three Renko charts (short-term, medium-term, long-term) show a clear uptrend with consecutive green bricks. The medium-term chart breaks out of a consolidation pattern upwards, and the short-term chart shows a reversal pattern from a minor pullback, indicating a continuation of the uptrend. Action : Buy calls as the uptrend signals an expectation of higher prices ahead. Example : If the long-term chart has been in a consistent uptrend, the medium-term chart shows a breakout, and the short-term chart indicates a reversal or continuation pattern, it suggests strong bullish momentum, making it an optimal time to buy calls. Scenario 2: Buying Puts Signal : All three charts indicate a downtrend with consecutive red bricks. A double top pattern appears on the short-term chart, suggesting a reversal from a minor rally within the downtrend. The medium-term chart starts trending downwards after a consolidation, aligning with the long-term downtrend. Action : Buy puts as the combined signals suggest a continuation of the downtrend. Example : After a brief rally indicated by a double top on the short-term chart, if both the medium and long-term charts reinforce a bearish outlook with consistent red bricks, it's an indication to buy puts, expecting the price to fall. Scenario 3: Buying Calls on a Reversal Signal : The long-term chart shows a downtrend, but the medium and short-term charts indicate a reversal pattern (e.g., an inverse head and shoulders or a double bottom). The medium-term chart starts showing green bricks, suggesting the beginning of an uptrend. Action : Buy calls to capitalize on the early stages of a potential reversal and uptrend. Example : Even if the long-term trend is down, a clear reversal pattern on the short and medium-term charts that aligns with an emerging uptrend suggests a shifting momentum, making it a strategic point to buy calls. Scenario 4: Buying Puts on a Failing Rally Signal : During an uptrend on the long-term chart, both the medium and short-term charts show a rally running out of steam, evidenced by a pattern of consolidation followed by a breakout to the downside on the medium-term chart, and a double top on the short-term chart. Action : Buy puts as the failing rally suggests a potential short-term downtrend, even within a larger uptrend. Example : If the long-term trend remains bullish but short-term indicators suggest a temporary reversal, buying puts can be a strategic move to profit from the expected downturn. General Approach for Options Trading with Renko Charts: Timing : Use short-term and medium-term charts for timing your entry into options trades. The short-term chart provides early signals, while the medium-term chart offers confirmation. Direction : The long-term chart sets the overall direction for the trade. Even in a bullish long-term trend, short-term downtrends provide opportunities to buy puts, and vice versa. Volatility : Consider the implied volatility of options before entering a trade. High volatility can increase option premiums, affecting the risk-reward ratio. Expiration : Choose expiration dates that give the trade enough time to work out. Longer expirations for calls in an uptrend or puts in a downtrend can be beneficial, allowing the market trend to fully develop. By aligning option buying strategies with Renko chart signals across different time frames, traders can enhance their ability to enter and exit trades with a higher probability of success, leveraging the clarity provided by Renko charts to navigate the volatility of the crude oil market. When buying puts or calls for Crude Oil (CL) futures with an approach akin to trading futures contracts but aiming to mitigate risk, particularly concerning options' time decay and other unique characteristics, a strategic approach is crucial. There are several key strategies to consider: 1. Choose the Right Expiration Time Horizon of Your Analysis: Align the expiration of the options with the time horizon of your market analysis. If your analysis based on Renko charts suggests a trend or reversal might play out over several weeks or months, consider options that expire at least 1-3 months beyond your anticipated trend reversal or continuation point. This buffer accommodates the time needed for the market to move in your favor while accounting for time decay. Avoid Short-Term Expiries: Short-term options are more susceptible to time decay (theta). While they may be cheaper and offer higher leverage, they also require the market to move quickly in your favor. Given the nature of Renko charts to filter out minor fluctuations and focus on more significant trends, a medium to longer-term option is generally more aligned with this strategy. 2. Consider Implied Volatility (IV) High IV: When IV is high, options premiums are more expensive, reflecting greater expected volatility. Buying options in high IV environments can be risky as you're paying a premium for the expected volatility. However, if your analysis strongly suggests a significant market move, this could still be profitable. Low IV: Buying options when IV is low can be advantageous because the premiums will be cheaper, reducing the cost of entry. If the market moves in your favor and volatility increases, the value of your option could rise both due to the directional move and the increase in IV. 3. Delta and In-The-Money (ITM) Options Delta : Consider the delta of the options. Delta close to 1 (for calls) or -1 (for puts) means the option price moves nearly in lockstep with the underlying asset, similar to owning the futures contract but with limited risk. Options with higher deltas are typically more expensive but less affected by time decay relative to their intrinsic value. ITM Options: Buying ITM options can be a strategic choice for mimicking futures trading. ITM options have intrinsic value and behave more like the underlying asset, with a higher delta and less sensitivity to time decay (theta) compared to out-of-the-money (OTM) options. 4. Rolling Options Strategy : To maintain a position in the market while managing time decay, consider rolling options. As the expiration date approaches and if your market outlook remains unchanged, you can sell the nearing expiration option and buy a further out expiration option. This strategy requires careful consideration of transaction costs and potential slippage but allows you to stay in the trade with a fresh time horizon. 5. Hedging and Risk Management Diversify Expirations : Instead of buying all options with the same expiration, consider staggering expirations. This diversification can help manage risk if the market moves against your position in the short term. Adjust Positions: Be prepared to adjust your position based on market movement and upcoming economic events. Use stop-loss orders or consider buying options with different strike prices to hedge your bets. Conclusion When treating options on Crude Oil futures like trading the futures themselves but with reduced risk, selecting the right expiration date is vital, taking into account your market outlook, time decay, and implied volatility. Medium to longer-term options with consideration for delta and ITM status can more closely mimic the behavior of trading futures while offering the risk mitigation benefits of options trading. Always incorporate risk management strategies and be prepared to adjust your positions as market conditions evolve. Part 6: How to Incorporate a Stop/Loss Strategy to-follow
NYMEX:CL1!Education
by mxb1961
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