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MichelGJulien

Did Crude Oil Made a Double Top Today?

By MichelGJulien, in Futures

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MichelGJulien    10

MichelGJulien
Posted

We came within 10 ticks overnight to match the July 19 high of 108.92. It was close, but no cigar. From that height, crude oil tumbled down for the rest of the session to an intraday low of 106.45, painting on my 4-hour what looks eerily like a double top. I'm personally not convinced that this is one for various reasons, but nevertheless, it definitely represents a warning sign by the market that higher crude oil prices are not really welcome. This morning the market opened at 107.38 i.e. within yesterday's range and value area. From that level, it needed to either go up to 107.87 to fill yesterday's gap or come down to 105.05 to fill Wednesday's gap. Well, it did neither ending up rather contained within a 90 cents range all day long.

 

attachment.php?attachmentid=36776&stc=1&d=1375482696

 

For those interested, earlier this morning the Brent-Wti spread went down to $1.60 from $2.40 when I recommended to short it a couple of days ago (too bad I didn't short it myself). I always keep an eye on this spread because once in a while I like to trade it. So, to recap today's action is pretty easy. From the beginning to the end of the pit session, oil's price gravitated around the level I had elected yesterday as my "line in the sand" at 106.66. Although it broke below it a few times today, it was never for very long nor convincingly. Below that level the potential for a $1-2 drop is very real in my opinion. I took 2 trades today. The last one I took is still opened and will be carried over the weekend. I read on zerohedge today that: "US Embassies Across Muslim World Mysteriously Shutting Down This Weekend". If there are some nasty things happening over there over the weekend, I may be pleasantly surprised with my open long position Sunday evening when trading resumes. Otherwise, well, business as usual.

 

attachment.php?attachmentid=36777&stc=1&d=1375482696

Wednesday's gap at 105.04 will be revisited. Question is: will it be before or after we hit $110?

 

I took 2 trades today:

 

1. Short 106.55 at 11:08, exit 106.95 at 11:46 for a -40 ticks loss.

2. Long 106.95 at 11:46, still pending completion. Results: -40 ticks today, +51 ticks this week.

 

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MichelGJulien    10

MichelGJulien
Posted
It is time for correction for crude oil, open short positions above $107

 

Yes, this could happen too (downside). But, I observed in the past that whenever the COT Large Speculator position is very long like right now, the market tends to remain up for longer than anyone can imagine. Just sayin.

 

Michel Julien

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