Hi JP. Yes, I understand your point and it is very valid, but from my perspective (medium-long term spreads) this is a very tough market to trade right now (on the long side). regards.
Personally I am used to taking a pounding, loss after loss, in fact I put on a trade expecting it to be a losing one, one thing I do not like seeing is immediate drawdown upon entry, so I have been studying price action to enable myself to see times when the odds are favourable enough to enter into a possible momentum, like shorting below support in a bear phase for instance. The only thing that I would consider from FA is that we are dealing with a commodity here which is limited & is in demand, which has been in free fall for a while now. Normally, expect a wicked rally at some point as a lot of shorts will have to be covered as soon as we have some sort of bottoming pa & resistance taken, that is why I am looking at a break of $45
Here is what I am looking at, we can see a DB with a hammer closing withing the body of a previous bar, both MACD's histo & RSI indicating oversold condition & signalling a retracement. So far not a single proper retracement on this weekly chart, solid decline from $145 to $33. On the Daily chart there is a possible IHS. I see enough grounds for a short squeeze. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2272193>
Good call JP. But did you notice that the March WTI behave the same way the Feb and Jan contracts did over those rollover??. For example, the Jan Contract back in Dec 15, was trading at 32, then when the rollover came, they went straight to the 40's levels, that week the feb contract trade at 49 high just to goes down there, Until We Touch The the 34 level (again) Its like a Deja Vu right now, I think that you can bullish this until 48-49 levels. IF this Contract breaks that level again, I thing we will see the 50's soon. IF this month we breaks the 35 levels 2 weeks before the rollover, this will crash big time.. let's see what happen. On the other hand (over the medium term), I can tell you, there's NO fundamental reasons to bullish this contract other than the Brent/WTI contango. sorry for my orthography, I just came from a Vodka dinner party I'll send you a PM this sunday, You are a very bright man, No doubt about it.
TY for kind words & input. As much as I tried to get involved in FA previously with stocks I always came to realise that FA mainly works in the long term type of trading or basically more investing. My character demands short term results, I know I will never benefit from a huge gain, yet this is not me to sit on eggs like a hen Short term FA is not important at all ImPO, one just needs to see where majority (stronger) interest lies & follow them, I used to trade a lot countertrend & win/loss was pretty terrible, money & trade management helped a lot. Nowadays, I tend to see a potential turn, then pick either a good support/resistance level & enter upon its break. So far this is proving to be a better strategy as far as win/loss is concerned. But money management & trade management are the most important factors. Look forward to your PM!
Bump, this is a good thread. Sorry JP, I wasn't able the PM, cause I'm very busy right now. I'll send you a link after this post. The March/April spread went from -$1,74 to -$4,90 (today) in one week. The March/Dec spread went from -$10 to -$14,75 (today) in 5 days. Now, Take a look at this charts, Its show the Fronth month weekly peformance on the lasts 4 rollovers in this contango market. Blue line: Nov/Dec Rollover Green line: Dec/Jan Rollover Red line: Jan/Feb rollover Second red line: Feb/Marc Rollover Every time there is a rollover, the short covering push the spot month upward for a couple of days, and then everything go back down..