Dear shorts, I know most of us are extremely frustrated with the situation of OIL in the past (almost) 2 months. Whilst it should have retraced a long time ago, it can't seem to do so. In the early stages of this short trade, mostly technical indicators supported the idea whilst in the past ±4 weeks fundamental factors should cause oil to crash, since despite OPEC's pitiful attempt to cut production, the glut has grown. Yet, we see oil refusing to crash and moreover, we see oil skyrocketing on days where data is the worst. This makes no sense fundamentally and thus I was led to conclude that there are MM involved in this state in which oil is traded under. Still, before every major downturn for oil we see a period of consolidation ranging from 16d to 58d. The longer the consolidation the worst the movement downwards (statistically). Despite my frustration I have been averaging down my position every time I find an opportunity. The downturn should start soon and it will be ugly. All the pumpers will flee and oil should crash. Yet, there is a possibility that pumpers win since the divergence between Hedge Fund and retail traders positions are at a huge divergence. Thus, I will set my stop in the range of 55-55.35.
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For order for this to be a confirmed pivot, we need 1. To break the 50DMA (on daily) 2. To break 50.50 to trigger panic selling
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If there is no insensible buying after EIA tomorrow, I think this is the moment we all have been waiting for. Oil is getting slammed.
Only down movement I see is this ABCDE Elliot. But to be honest I don't count on this trade making any money for the next weeks. So I will stop averaging down and let the trade develop itself. After all "I might be wrong" (or it is just manipulated, you judge)
If we fail to break the triangle to the downside, I will consider exiting the trade. Yet, i think this is the end of the speculation era. Time for reality to hit the market like a train.
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Oil will pop tomorrow on terrible inventories because "you know what, we might have huge builds of oil inventories which show deficient demand, but hey at least we put in effect some miserable oil cuts, now buy oil #OPEClogic #MM"
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If the past weeks have been consolidation this is the week we start the next 4-6 weeks of bear domination.
I am long oil so hoping for breakthrough in the next month after which summer driving should see massive drawdowns. Currently up 12% since OPEC cuts around 15k. We shall see if optimism beats fundamentals but the way I see it rigs will take at least 6 months to ramp up to 500,000 bbls/day. Libya and Nigeria are more of a risk to oil in my opinion.
BigCharts
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@sentrypetal, But we are already seeing demand deficient surpluses
sentrypetal
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@AlexTrik, Looking bullish hope you closed out your shorts. Market is 90% long 10% short time to hit $55 for WTI then it's surge all the way to $60.
BigCharts
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@sentrypetal, still, short. Remember to discount for rollovers.