Trading Ideas #170703 - OIL Tells us to Get the Fuck Out!

Monday morning and back in front of my charts again!

No more of this BTC/USD weekend trading stuff for the punters, we're back to the REAL markets (ohhh, come at me crypto nerds!) here, with a look at how our OIL trade played out.

So if you're a part of what we're doing over on Twitter, you remember that a couple of days ago, we had a look at an intraday oil chart where we had the commodity stepping down in a textbook manner retesting previous support as resistance with each step.

The pattern was so bearish that it hurt, but it had already played out too cleanly. And in markets when something is too good to be true, it is. Always.

In this case, because of all the textbook clean shorts that were being built, everyone had their stops just above each step. All it would take for the longs to win this little battle would be to knock out that first lot of stops and then you'd get a runaway spike up.

This was my thinking:

But now that price is back retesting this level for a second time, I'm starting to think that if it pushes through the zone then it's going to rip higher as it collects all the shorters' stops along the way.

Taking a look at the 4 hourly (which is just a continuation of the chart in that previous blog that I linked to at the top of this post), you can see that when price couldn't make a new low and came back up to retest the previous support level that had already been used as resistance once, it was goodnight bears:

Pop! Well, there goes those obvious stop losses. Easy pickings for the smart money there.

The move higher wasn't just a random spike. Everyone thinks that when markets spike like this, it's just an irrational move, but in fact, that statement couldn't be further from the truth. News or stop run spikes like this are still extremely technical in their price action behaviour.

Just take a look at this intraday chart of the spike that took the stops:

That's a break of the highs, a pullback to retest the previous resistance as support and then lift-off without even remotely looking back. The perfect type of price action if you are on board.

To wrap up, how about this quote from the first OIL blog post that again, I linked to above already:

Price action right here, right now in this zone is key whether I want to add into shorts, or get the fuck out.

Well... I think that was a pretty self explanatory get the fuck out!

You're welcome! :)

Peace.