Thank you for reading this week’s CL analysis
Before I get into the analysis today, I want to say “thank you” for those that watched our presentation on asymmetrical returns. As discussed, this is something I look for in my “everyday” trading. If you are not familiar with the concept of asymmetrical returns, Tony Robbins (world renowned motivational speaker) spent with Paul Tudor Jones (legendary day trader) discussing Paul Tudor Jones’ secret to success. You can catch this short video here.
Good stuff, right? You can see a trade that I took in our Live Day Trading Chat room where we hit a target of 127 ticks ($1,270) on the CL Friday…asymmetrical returns.
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Oil posted its single biggest loss in more than a week on Friday. At one point, before rallying into the close, oil had lost over 200 ticks.
Despite the fact that there is continued price support from the agreed upon production cuts, there is still considerable pressure from the increase in U.S. oil production.
Baker-Hughes released their weekly rig count report and for the 11th week of the past 12, the number of rigs actively in production has increased. ariq Zahir, managing member of Tyche Capital Advisors is quoted as saying:
U.S. rig counts and production figures “in the weeks and months to come” could prompt OPEC members to cheat on their agreement to cut back on output, so they don’t lose market share
Earlier in the week the EIA stockpile report showed a 4th straight weekly build in inventory.
With the information that production cuts (by major producers) is reducing global supply and the idea that U.S. producers will re-enter the market on an easing of restrictions by President Trump, it is no wonder that we continue to trade in a narrowing price range.
Crude Oil CL Analysis – The Charts
I’ve really been talking quite a lot recently about the same thing….Crude is in consolidation mode and will continue to be until we get a better handle on how the OPEC production cuts will be affected by the increase in U.S. producers ramping up production.
This chart shows the consolidation after a reaction off the 78.6% fig level.
The high or low of the week is made on a Monday or Tuesday of the trading week. This week the low was made on Monday and the finale “spike” lower on Friday was right to the 61.8% retracement “to the tick”.
Summary – Oil CL Analysis
As you can see this week’s summary is “light on charts” and the reason is that the market is “light on activity”. From a big picture perspective it has been more of the same….chop-chop. And, until we break out of this consolidation pattern we can expect more of the same.
Above the Market
54.30 – 54.70
55.40 – 55.80
56.50 – 56.90
Below the Market
51.80 – 51.40
50.75 – 50.25
49.35 – 49.00
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