China has now announced that it is imposing retaliatory tariffs on $60bn of US goods from June 1.
Beijing says it will not swallow any “bitter fruit” that harmed its interests. And the Chinese foreign ministry said that China would “never surrender to external pressure”!
Mr Trump’s response was that “China should not retaliate - will only get worse”!
Only a short time ago all the talk was about trade negotiations going well - now we seem to be close to a total breakdown!
Things are hotting up!
Unrest in the Middle East oil markets = oil prices go up
Black clouds over the trade wars = oil prices go down
Decided to take my 50+ pips and run! 
That is the kind of trading world we live in nowadays! 
1 Like
SP500 through last week’s lows - will this contiinue:
Oil prices now dropping back as a result - I think, on balance, that 50+ pips was worth closing out - this is so uncertain!
2 Likes
In terms of overall economic impact there had to be a rise in inflation but that didn’t surprisingly materialise. There is even wage pressure from labor market but inflation is kept subdued by some mysterious factors. Low consumer demand is the most likely driver of this but wage tells different picture. This is definitely the issue not covered by most conventional economic textbooks!
Yes we are living in unusual times nowadays - and the standard patterns and formulas do not necessarily fit the situation!
Inflation is of course a broad index with several specific group classifications. As you say, consumer demand has a significant impact on these figures. If people save instead of spending, for example, even though wages are increasing then the pressure on prices may not be as high as anticipated. I don’t know if this is the case in the US right now - this is rather beyond my normal scope of study! 
Well the potential break through that S/R didn’t happen and price reversed somewhat short of its lower edge. It was the right decision to take the profit - and price did then sink fast back into last week’s mid-range. I would remind that I generally only look to buy commodities, otherwise, TA-wise that would have been an excellent point to sell with a stop above the zone. (I did sell SP500 instead for another day-trade and a similar profit on that - so an ok day in the end.)
Looking at the daily chart for this year, we have actually now broken that continuity of the uptrend that started back in January - at least on my model! 
My chart is now entering a compression stage and is actually around the same level as the superimposed weekly chart (grey cloud).
This provides evidence of the suspicion that oil prices are possibly entering another widely ranging market sandwiched between supply outage risks and possible global economic downturn.
Note: I do not trade my charts as a mechanical system. They are just a tool that I use to evidence my own fundamental outlook. If it does not agree then I stay out. I think there is a strong need in OIl to trade on a discretionary basis as things can change so very quickly and oil is such a, well, what can we say, fluid commodity! Yesterday was a prime example of the need to be able to reverse one’s view within minutes. There is no room for personal pride in trading - the main aim is to stay in the green, that’s all!
1 Like
S&P 500 if it breaks current levels… likely to go down upto next crucial level as per monthly.
I am a beginner… so is my analysis
1 Like
Hi @joss123
I am not sure if you were looking for comment on your chart S/R levels but you’re gonna get it anyway! 
Generally speaking I don’t find lines on a 4H (240m) chart too reliable if they are only based on near term reference points. But in this case, your lines do project backwards to some relevant levels in March as well. Although I would have put the upper (resistance) line a little higher than yours.
Effectively, these lines are only reflecting last week’s range and that raises some concerns regarding using them for reversals. They may indeed hold, but we are well aware that naturally price is not going to stay in one week’s range for very long and so one of these will break in the near future.
I often prefer to identify zones rather than thin lines and mine would look something like this right now for a 4H TF:
But one other useful step is to scale up the same chart to a daily TF and see if the same zones/lines make sense. Often a 4H line may lose its context on a daily chart. In this case, these zones still make some sense even on the daily:
And yet another sometimes useful approach is to then change the chart from candles to line (close) and this can clarify key areas even more. This is the same chart on a line basis and the same zones still make sense - although some of the previous touches have now disappeared:
1 Like
Thanks for your reply
How to arrive at these zones … i find it difficult to find zones… if you could elaborate
So zone is an area where there is probability of occurrence of significant event say it reversal or continuation … is it so??
Drawing zones is really just the same as drawing horizontal S/R lines. It is an art rather than a science and purely depends on how you see it.
The idea of horizontal S/R’s is to join points where markets have reversed previously. The assumption being that price may reverse again from the same level. But markets are never that precise and therefore there will be earlier points which don’t quite touch the single line, and so when there are a number of points that are sufficiently close to each other then one can draw an oblong/rectangle that covers the small range between these points.
If we describe what we are doing in words then it would be that a line says price may turn at this value - but a zone say that price may turn somewhere in this range.
Personally, I wouldn’t suggest just blindly and mechanically placing orders in front of these lines. They should be viewed in context with the overall view of future direction and the current underlying trend.
And often it is better to wait until the price has actually reversed before joining in.
The main advantage of entering a position close to an S/R line/zone is that it offers sound risk/money management. If price does reverse then a good move could follow thereafter, but one can also place a relatively close stoploss order on the other side of the zone. This provides a good R:R opportunity of optimising profits v. losses. And in a business based on probabilites, this is the key to consistent earnings over a period. I.e. when you are right you earn more than when you are wrong!
I would also add here that, in my opinion, the formation of S/R levels in a commodity like oil is far more valid than with currencies. All nations have to routinely and regularly buy oil and most oil is priced in USD. Therefore all nations will be deciding at which price oil is currently considered to be a good level to buy at. They have a relatively small window in time within which to buy their next loads and so there will be a great similarity in the current price that people come in to buy at.
That is a bit like filling your car with petrol. One can shop around for good prices but there is a time limitation to do this before you would actually run out of petrol! I actually do play a game of timing when I fill my car according to my oil charts! There is a noticeable time lag between Crude Oil prices and the prices at the gas pumps and I have developed quite a skill in timing my refills! Its just a play thing really, but nice to save some money that way - kind of adds another dimension and a touch of reality to my trading! 
1 Like
OIl prices rising but still within last week’s range. Following on from yesterday’s news of sabotage attacks on SA oil tankers now this quote from Investing.com:
“Investing.com - Oil prices rose on Tuesday after reports of a drone attack on two pumping stations on one of Saudi Arabia’s most important export pipelines.
Crude turned positive and spiked to intraday highs after Saudi Arabia’s oil minister Khalid Al-Flaih accused Yemen’s Iranian-backed Houthi rebels for carrying out the attack. He said “limited” damage had been done but noted that the East-West pipeline, which takes oil to the port of Yanbu on the Red Sea, will be closed as a precautionary measure.”
1 Like
No big changes yesterday.
Mr Trump downplays the US-China trade war as just a squabble, SA reports attacks on a pipeline and API reports a larger than expected build in oil stocks - and the oil market has an inside day within last week’s range…
Iran, Venezuela, Libya and Nigeria are still major outage risks whilst the US and SA are still capable of increasing supplies as required.
EIA Crude Oil stocks release later today
June sees the next OPEC+ meeting.
The equities markets seem to be absorbing the negative risks from the trade talks…so far. If we start to see serious signs of further economic weakness in China, Germany, etc then expect accelerating falls in equities globally - and a reflection of this in oil markets.
The US and China have traded blows and tested each other’s weak spots and even drawn a little blood, but we are still in the early rounds and a long way from a knockout…
1 Like
EIA reported a build in crude oil stocks of 5.4 mill barrels which was a shade higher than expectations - which could have continued the earlier drift off in prices. But it seems the market was more interested in the firming equities market and turned up from the 60.75 1st support level.
But it seems there is little interest in any follow-through yet. Yesterday was an inside day and so far today we are still around the middle of Monday’s range and still within last week’s range - that is perhaps about as neutral as one can get!!!
The combination of tailwinds and headwinds in the oil markets is keeping prices really tight so far in May. I am still a buyer on dips but if I see 40-60 pips then I am taking it…I was a bit late in on this one: 
1 Like
Oil has managed to drift higher in spite of the potentially bearish EIA oil stocks figures. In an attempt to find some justification of such a thin move (commentators always have to have something to say, afterall) it seems we are putting this down to Mr Trump holding off on the implementation of car import tariffs and the attacks on SA oil pipeline and oil tankers in the Hormuz area.
However, the longer term charts are not showing much of any significance here. Here we are on Thursday morning still within Monday’s candle range and still within the range for the whole of last week. We are now half way through the month and we have only seen a fairly tight consolidation pattern:
However, often there is a message to be gleaned from the charts about has not happened! 
In this case, I think the recent deepening of the US-China trade wars could have sent equities into a real tailspin considering the negative economic data that started to appear after this face-off began (e.g. drop in China car sales). One could easily have immediately anticipated further global slowdowns. But this has not happened and nor has oil price collapsed alongside it.
On the other hand, the risks of further oil supply outages is very real and the tensions in the Middle East right now are also very disturbing. The withdrawal from Iraq of US non-essential staff and other army nationals is not just psychological warfare. The risks of further disruptions in that area as well as the Venezuela, Iran, Libya, Nigeria uncertainties all suggest that supply is vulnerable - meaning price is well-supported here.
As a result, I think we can say that although the charts are fairly neutral, they are not actually negative at all - it feels more like oil markets are a bull market waiting to happen…
All we need is a catalyst…
But we are right at the top of that range on that 4H chart and we are still below the 4H 200SMA at 63.02 and that makes it difficult to enter a long here. But we have shrugged off quite a bit of significant bearish news recently…
Is this a “shut your eyes and jump” scenario…
1 Like
Well this time it paid off in that we broke up to the top of last week’s range. I’m out now and will wait to see if we get a pull back from here. … but I will have to hide my shame if we just break up from here and I find I got off the train too early 
(it wouldn’t be the first time! - or the last…)
We are still below the 4H 200SMA and if we don’t get a pullback then I will look for a close above (and retest of) that SMA before resetting my long position:
I kinda guessed it was going to do this! Must be getting overly cautious in my old age!
In fact I must have been a bit off today, because usually in this kind of situation I would have closed out only half my position and moved my stop to B/E - why didn’t I even think of that today? That would have been the smart thing.
Interestingly, I also went and filled my car up this morning at 1.56€ and when I went to the shops just now it was already 1.61€ - and on the way back home, it was 1.64€ - hey! That’s about another 6€ profit today!!!
I don’t know what to do now!!!
I, for one, hope you sat on your hands!!! LOL!!!
1 Like
so far so good! If we finish well tonight then i will look for a suitable reentry tomorrow, but i don’t often leave positions open over the weekend.
Not much change overnight. Seems yesterday’s strength was mainly leaning on the stock markets’ own resilience to the trade war vulnerability.
We managed to break last week’s high and even slightly over Monday’s high, but it didn’t seem to have stamina to stay there. We even tried another rally today in the Far East markets but again it has dropped back under the 4H 200SMA and back into that same old range.
Its Friday and futures roll-over to the next front month and little new to spark a rally at this stage. So it seems to me prudent to go and do something in the garden and take a new look when the US arrives at work!
On a longer term perspective, yesterday’s move did enough to encourage a more bullish outlook, but I suspect that is not going to be anything world-shattering against a background of trade wars and the looming OPEC+ meetings in June 25–26 where the current production cuts agreement will be evaluated.
There was also an interesting report on the future progress of EVs and how the combustion engine has reached its peak in growth. That is also a damper for the oil industry, which is also looking to diversify into other areas. But that is a much longer time window…
