Update for the week of June 28th, 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 28th, 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:

(no Volprofile chart available this week)

Market Overview: As the notion of the end of the US Fed's QE program gains hold, 'risk' assets seem to be slowly deflating at the same time as bond prices do too. While some may have seasonal (grains) or geopolitical (Crude Oil & products) forces supporting price at the moment, the general distaste for anything commodity related can be clearly seen within our two commodity proxy currencies, The Canadian and Australian dollars. Both have 'broken down' and now the Canadian stock benchmark has broken down in earnest too - not a good sign for commodity bulls. Lastly, our Professor of Economics (HG Copper) forged to new lows this past week, seemingly confirming our bearish macro-economic scenario.

Weekly highlight: The post options expiry sessions did indeed see a bottom finally come in at 92.67 only to see price violently move right back up to 50% of the entire move. Subsequent selling pressure couldn't take the market lower and as a result an interesting bull ab=cd developed through the week. Its target was hit and exceeded briefly, only to see price fail both into the Friday weekly options expiry, and Q2'13 quarter end. From a geopolitical perspective, Egypt appears on the brink of civil war and that may have put 'a bid' into the market following the all important June '13 options expiry last week.

It is very important to note, given the light holiday sessions and the end of Q2'13, I would be reluctant to hold any position or significant bias in earnest until we are on the other side of the holiday and indeed, the first two weeks of Q3'13.
 

Trading Plan: Along with my very strict momentum model setup (refer to last week's blog for more on that) I am going to add a play/setup off harmonic ab=cd price pattern going forward. I have long been a fan of the ab=cd price pattern but have found it very hard to use with regard to risk / reward ratios (following the ab=cd marks alone). I recently found a very helpful tool (produced by the good people at Netpicks.com) that has greatly increased my confidence in taking positions off these patterns....ty netpicks....

AB=CD Model setup

1. $.50 initial/primary move in price.

2. Consolidation back to at least 33% but no more than 66% of that move (about .25).

3. Combination of '3 bar pattern' & 'trendline break pattern' on 3m chart.

4. Move to Fib/Harmonic AB=CD OTE Trade Entry Calculation (TEC). Initial Reward to risk on all ab=cd setups should be 3:1 and all levels should be known ahead of time. Enter orders AOCO initially then move stops as model indicates.

Where TEC (A, B and C  are known and price moves through MA's from point A to B):

Bull ab=cd;

D = (B-A)+C

Entry = [.25(D-C)]+C (price is brushing down against MA's as support)

Initial Stop = C-1tick

Profit Target = D

Move Stop to b/e at [.66(D-C)]+C

*Move Stop to 'trailing 5 ticks' at D -10 hit.

Bear ab=cd;

D = (A-B) - C

Entry = [.25(C-D)]-C (price is brushing up against MA's as resistance)

Initial Stop = C+1tick

Profit Target = D

Move Stop to b/e at [.66(C-D)]-C

*Move Stop to 'trailing 5 ticks' at D +10 hit.

(*not entirely sure as to this trailing stop strategy and will fine tune over coming sessions)

I just finished my most recent combine ($30k 10 day) with a positive account balance and meeting 2/3 metrics required by TsT to qualify for a 'roll over'.....yay Brian! While still not 'funded' yet, I must take some pride in this being my 16th combine and never 'blowing one up' yet.....wtg Brian...With all this in mind, and the very light holiday sessions to come, I shall NOT begin my next official combine until at least the week starting July 15th. For the next 2 weeks I shall be paper trading my two models (listed above and in my trading plan) and getting more comfortable using just these two setups through my trading 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/

July, 2013 L&B $30k combine trading plan: