CLF13 - Update for the week of November 16th, 2012

Welcome back to CRI's ongoing Crude Oil Day Trading Blog.
Price analysis you see is CLF13 (roll week), for the week of November 16th, 2012:

Market Overview:  As the air came out of the US Presidential election cycle's balloon this past week, prices consolidated through the lower half of the massive $5 range established just prior to and just following the event. Interestingly, almost within hours Israel began mobilization efforts in what appears to be a long pent up reaction to 'unprovoked' Palestinian rocket attacks. Regardless of the reason du jour, the war drums are beating rather loudly within the rejoin with really no telling how any of this will resolve. Given the broader markets poor fundamental backdrop there appears little from a medium term perspective to support a turn higher from current levels. Having said that, prices are currently well below Q4'12's start and while CRI's 1st 2 Weeks Of The Quarter study did suggest energy under performance for the quarter it did not suggest collapse. Indeed, we could easily enjoy a nice rally into year end just to bring us back to unchanged levels. 

Weekly highlight: This past week's price action was rather well contained given the market's recent volatility. Short covering and maybe even a little long speculation on serious news of mid-east war has put a temporary floor in prices and as of late Friday even suggested a tradable bottom. The break through $87.25 does suggest prices could push more than $2.00 higher in the short term. Additionally, several harmonic price patters do suggest further upside price movement is likely. Having said that, $90 to $95 would represent significant resistance and I shall be looking at the short side in earnest should we get up into that area.

Trading Strategy (1 week):Last week's very wide $5.00 trading range compressed into a little over $2.00 trading range. $85.10 was tested twice and represents a floor in the short term. Conversely, $87.25 was tested on multiple occasions and was finally breached on Friday. I shall be watching the 30 minute and 15m OTE levels for possible long entries as we work up into Harmonic price pattern targets, OTE Short sweet spots and Gap targets.

Mental State Review: I got a big mental boost this week from writing down my common mistakes on a one pager and asking/review the list each time I considered a trade. Needless to say, it both cut down my over-trading and set a standard to measure my performance by. This led to another mental boost when one of TsT's moderators suggested I had very good entry points but just needed to work on turning scalp wins into position wins (ie holding onto my positions for a little longer). I feel I am ready to take that step as in the past I just didn't have the confidence in my entries to hold on.

 

Trading Plan for this coming week: Watching for and using 'OTE' setups to identify buying and selling opportunities at key support/resistance levels on the 60m/4hour charts. Confirm 'good-trade-location' based on 30m/15m/5m Kelt bands. Once trade zones are entered, drill down to 15m/5m for OTE entry points (coupled with momentum/volume divergences) and follow the trade process.

Trade Process: Once 60m/4hour OTE sweet spots are entered and market has confirmed vol/mom divergence, b/s 1 aoco (-.21/+.41) at 5m OTE entry levels where prev. peak/trough (+/-.10) is no greater than 21 ticks....

 

Daily Risk and Profit objective: Either 2 initial losses ($-430) or three wrong trades in a row (-$645.00) equates to end of day (Very hard to do!). Gains of more than $1000/day equates to end of day - and a big pat on the back.

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/