If there’s one trade that is worth looking at, it will be Crude Oil.
As 2014 closes, crude fell from $115 to around $40 since June.
News outlet begin reporting about possible reasons:
- Price war from OPEC
- Too much supply in the form of shale oil from US
- Weak demand
A common theme I heard from fellow traders is “it is now low enough to buy”. They said it at $80, and they said it again at $60. And again at $50 and the beginning of the year when the price is at $40s.
However, if we were to look at the chart and see how crude oil break down in June, what justification do we have that this is a good time to go LONG?
From the Ichimoku Daily Chart for /CL, we can see the following:
- Since last June, when it breaks support, crude has started on a bearish trend
- Towards end December, we saw some consolidation of price. However, is this a bear flag formation ‘in-progress’ ?
- From the Ichimoku chart, we can also see that it has hit the Chikou Span resistance twice
- The leading kumo continues to shows a huge resistance with no change in trend.
Based on the observation above, there is a high chance that we may see a downward movement towards the $40 next week.
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MasterCard ($MA) has been lagging behind its competitors in many areas in the market. More importantly, in the areas of innovation and new markets, it is now facing competition not just from traditional competitors like VISA but also the likes of PayPal, AliPay etc.
The chart shows a bullish run up of MasterCard with good strong volume breaking out of the thin Kumo resistance with a gap.
What troubles me is the candle reversal at the top. Almost the very next day after reaching its peak, $MA reverse at the same peak price level and the bears seems to be taking hold of the situation and reverse the whole gains in the same day. It could be short term traders cashing in their profits. After, a sell down could easily push it to the low $80 range.
To quote Bulkowski definition on Tweezers Top:
Tweezers top candlesticks are simple to find in a historical price series. Just look for two adjacent candles with the same high price in an uptrend. Candle theory says that the pair is supposed to be a bearish reversal because it illustrates overhead resistance, but my tests show that tweezers tops actually act as bullish continuations 56% of the time. That performance is, of course, near random. Thus, expect the breakout to be in any direction. With an overall performance ranking of 81 (where 1 is best), that suggests the price trend after the breakout is weak.
Trade with care.
With the upcoming vote in Scotland on its independence, GBP/USD has fall off the cliff from 1.71 to 1.61 within a month.
On the daily Ichimoku chart, it seems that the trend remains pessimistic with no consolidation in place. Though it has bounce off a low of 1.6103 with immediate resistance at 1.6332
On the Ichimoku weekly chart, it is more optimistic with the uptrend remains intact. Current price range is inside the kumo which suggest that the trend is unconfirmed (pending vote results).
Kumo support extends all the way to 1.58 on the weekly chart.
1. We can wait for the results and if it breaks 1.64, that could be a good entry point.
2. If it fails to break through 1.64 after the results, it could be a short entry point.