Update for the week of June 14th, 2013

Welcome back to CRI's ongoing Crude Oil Day Trading Blog.  

The first picture is daily, weekly, 120 minute charts with term structure and CoT summary for the week of June 14th, 2013. The Second picture is the weekly Volume Profile with price overly. Each trading day (time permitting) a 15 minute chart is added and trades for that day are reviewed:

 (courtesy of http://www.sdfanalytics.com/)


Market Overview: Has the monster correction within the European currency space finally come to an end? This past week\'s price action would suggest so. The Euro and B. Pound are now pointing higher and the Swiss Franc looks to be shortly along the way. Interestingly, the only sector within the commodity space that looks like it wants to follow along is the energy complex (ex N. Gas). Within that space Crude Oil and Heating Oil look ready to go with Rbob trying to turn as well. Sadly, looks like the consumer is going to feel this summer\'s rise in energy costs right in the pocket book. But in the same breath, that rise in energy prices may act as a natural break on the economy relieving the US Fed from having to do too much heavy lifting.

Weekly highlight: This past week saw the Crude Oil market finally breakout to the upside. This consolidation has been very long and and trying for day traders. We now may be entering a 'trending' market which makes for some interesting 'trend following' trade opportunities. Considering the Geo-political situation around the middle east, a test of the $100/barrel level shouldn't be too unexpected. Considering too the overtly bullish stance the 'smart money' has had for some time now, it looks like they are finally going to get paid for their patients.
 

Trading Plan: I am following my trading plan (pdf link) closely of late and that in itself is a good progression. My trades this past week were defined and disciplined. Having said that, it would appear that some of my setups are still a bit vague and need work. I took a 'panic' setup early in the week only to see if fail after realizing the trade I took was on the heals of a completed 'panic' trade just a few hours previous. I took an OTE long in the face of a very bearish 15m momentum backdrop and that trade too failed (-28 ticks total on the two trades). The following day (Wed.) I again followed my plan and took the 7AM range trade in which I took both legs of the trade setup heading into the weekly EIA inventory report which in itself wasn't a smart chance to take (-32 ticks). I made up ground on Thursday with a very well timed momentum trade that netted +32 ticks in just under 2 minutes.

With this experience in mind, I think I am going to concentrate on the one solid setup I have working at the moment and that is my momentum trade. This is the basic outline for my Momentum trade strategy:

Setup Management

1. Price must have entered a valid 1 to 4 hour OTE sweet spot (70.5% retrace of primary move)

2. 15m & 1hr MA relationships are in same direction with momentum confirmation

3. Watch for 15m doji (ideally in and around TF trade locations)

4. Move to 3m 

  1. Wait for Momentum divergence/acceptance to develop.

  2. Draw Fibs off previous swing range - 38.2, 50 & 70.5

  3. Draw trend line defined by that range

  4. Take position on trade 1 tick below/above h/l of bar that closes above/below trend line & stop (-.15) is above/below 2 previous sig res/sup levels.

Find VolProfile/Trendline/Gap/AB=CD targets and only enter trade IF reward is at least two times risk.

Trade Execution

1. Enter order on AOCO basis (-15/+45)

2. Once order entered leave to fruition.

Risk / Reward management

1. I can only move my stop once +30 (or twice what I am willing to risk) has been hit

2. I must force myself to consider every time frame (TF trade location) as a possible trade opportunity (5AM pst, 6AM pst, 7AM pst, 8:30AM pst, 11:30AM pst)  

3. Two strikes (-15 ticks each) and you are out (-$310 max loss on day) 

4. Daily goal is +45 ticks (or +$450 profit on day)

That's all for this post, 
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/