12062018 Trade Plan — Big Drop During London, OPEC+ meeting 1mbd production cut

06 Dec 12062018 Trade Plan — Big Drop During London, OPEC+ meeting 1mbd production cut

12062018 Trade Plan — Big Drop Dur­ing Lon­don, OPEC+ meet­ing 1mbd pro­duc­tion cut

Per­son­al made up terminology

• BO = Break Out
• BD = Break Down
• CAR = Con­firm As Resistance
• CAS = Con­firm As Support
• UKC = Upper Kelt­ner Channel
• LKC = Low­er Kelt­ner Channel
• TV = Tick Volume
• WPP = Week­ly Piv­ot Point
• DPP = Dai­ly Piv­ot Point
• DR = Dai­ly Resis­tance (piv­ot)
• DS = Dai­ly Sup­port (piv­ot)
• WR = Week­ly Resis­tance (piv­ot)
• WS = Week­ly Sup­port (piv­ot)
• HL = High­er Low
• HH = High­er High
• LH = Low­er High
• LL = Low­er Low

Per­son­al Checklist

Health review (for the past week)

• How would you describe your over­all health? 
  • My sleep­ing is get­ting bet­ter. Also I turned off all devices last night and con­tin­ued read­ing the Play­Book before going to bed. I did sip a lit­tle bit of whiskey while read­ing. Over­all I think that I am feel­ing bet­ter now that I have start­ed fast­ing inter­mit­tent­ly as well.
• How would you rate it (1–5)?
  • 4

The Big Pic­ture (dai­ly)

• What hap­pened yesterday? 
  • Yes­ter­day we seem to have reject­ed the Dai­ly VWAP mean that coin­cides with the high­er time frame S/R area at 53.75 lev­el and it’s pos­si­ble we might have more sell­ing pres­sure com­ing in today.
• What is the mar­ket sentiment? 
  • What does the crowd think? 
    • Accord­ing to investing.com yesterday 
      • All sen­ti­ments is 58% bullish
      • Last week 60% bullish
      • Last 3 days 65% bullish
    • Accord­ing to investing.com today 
      • All sen­ti­ments is 57% bullish
      • Last week 60% bullish
      • Last 3 days 61% bullish
    • So we see a 4% decline in the last 3 days on the bull­ish sentiment
• EURUSD
  • The dai­ly chart shows there might be some more sell­ing pres­sure on the pair and thus an increase in the USD val­ue which makes it cheap­er to buy crude and thus can put some buy­ing pres­sure on the mar­ket. How­ev­er we haven’t bro­ken the 1.13 lev­el yet but we did break 1.14.
  • Next sup­port is 1.12
  • Accord­ing to investing.com 60% is still net long on the pair

Intra­day Fundamentals

• API report
  • Pre­vi­ous 3.453M
  • Actu­al 5.360M
  • So there was more of a build than pre­vi­ous­ly expected
• EIA report
  • Pre­vi­ous 4.851M
  • Fore­cast 0.769
  • Actu­al 3.577M
  • So we have way more build than was fore­cast so expect more sell­ing pres­sure to come in
• What are the head­lines of today? 
  • Oil Prices Sink On Sur­prise Inven­to­ry Build
  • Chi­na says it will resume buy­ing US crude oil after Trade War Truce because the because the ten­ta­tive halt on addi­tion­al tar­iffs and low­er oil prices are mak­ing Amer­i­can oil attrac­tive again
  • OPEC is try­ing to per­suade Libya and Nige­ria to join cuts if the car­tel agrees to reduce pro­duc­tion while OPEC+ is still dis­cussing how much to cut and how to share these cuts out 
    • Nige­ria was exempt from cuts in Nov. 2016 because of dis­rupt­ed pro­duc­tion through violence
    • Nige­ria and Libya seem reluc­tant to cut because of frag­ile secu­ri­ty situation
  • OPEC’s crude pro­duc­tion increased 40.000bpd from Octo­ber to 33.08M bpd in Novem­ber try­ing to off­set the Iran drop off
  • Sau­di Arabia’s Ener­gy Min­is­ter met with US spe­cial rep­re­sen­ta­tive for Iran on Wednes­day to dis­cuss new pro­duc­tion cuts to rebal­ance the market
  • OPEC meet­ing lat­er on today
• After Bush’s funer­al yes­ter­day there should be more liq­uid­i­ty com­ing into the market
• How is the Geopo­lit­i­cal sta­bil­i­ty in the world? 
  • Huawei CFO arrest­ed in Cana­da on request from US might put trade talks in jeopardy
  • Gold rose 0.2% to 1239.77 an ounce
  • Yemen and rebels are star­ing truce talk today
  • Rus­sia: US doesn’t have any proof for vio­lat­ing nuclear treaty

My trade plan and intra­day TA

• What can we tell from the PP levels? 
  • DPP went down 2 points and we can see an increase in DR1 lev­el 54.179 as opposed to yes­ter­day but DR2 is still hold­ing about the same lev­el at 55.447
  • On the sup­port side we have DS1 with sim­i­lar lev­el at 51.884 and DS2 inch­ing a lit­tle low­er at 50.857
• Where are the high­er time frame S/R levels? 
  • We have resis­tance at 53.75
  • Sup­port at 52.55 is a cru­cial lev­el and if we break that the next big sup­port is at 50.50 so we have a 2 dol­lar poten­tial drop which could be in line with the big­ger Dai­ly down­trend pattern 
    • Usu­al­ly a big drop comes before we reverse and go back up
• What does the 4H and 30M chart show? 
  • On the 4H we can see that PA stayed rang­ing between 52.55 and 53.75 and we can see that we are at the sup­port lev­el so there might be buy­ing pres­sure com­ing in at 52.55 level
  • On the 30M we can see that yes­ter­day we tried to break that 53.75 lev­el and actu­al­ly went over it and dropped hard till under that lev­el and the lat­er on con­firmed 53.75 as resistance
• What has the Asian Ses­sion printed? 
  • Dur­ing the Asian Ses­sion on the 30M we can see that price tried reject­ing the 52.55 lev­el but we are still not in the clear yet since we haven’t real­ly pushed away from this lev­el yet
  • On the 5M chart we can have a bet­ter look at the rejec­tion from the 30m chart by a big drop down to 52.25 lev­el and then retraced back 50% before rang­ing in a tight range from there on. The retrace­ment had almost the dou­ble of tick vol­ume than the drop one can­dle before. Anoth­er rea­son for me not hav­ing more of a bias that we will BD or not. We will have to see what hap­pens when liq­uid­i­ty from Lon­don comes in.
• ATR
  • What is the ATR on the daily? 
    • Is it increasing/decreasing?
      • We are still increas­ing in ATR and have about 2.4605

Trade Plan

• Wait for signs on the 5M/30M of a poten­tial break of the 52.55 lev­el for a good down­trend with pos­si­ble drop till 50.50 level 
  • Look for BD from this level
• Wait for a sign on the 5M/30M of a poten­tial BO from the 53.75 lev­el or that would be a good short entry after rejec­tion on that level
• We might be stuck rang­ing between 52.55 and 53.75
  • Trade the swing rever­sals on the lows and highs

Read­ing the Tape

• • What is print­ing? Look for PA with high­er TV. 
    • Dur­ing the Asian Ses­sion we had the sec­ond rejec­tion of the 52.25 lev­el at 8:35am (14:35) on slight­ly high­er TV
    • Then we start­ed our incline (on increas­ing TV) slow­ly test­ing 52.50 again and then shot up till 53.50 before 10–15 min­utes before Lon­don open we got smacked down again by the bears and we are test­ing 52.50 lev­el again which is also the 30M 200MA 
      • Let’s see if we will CAS or actu­al­ly BD
    • 10:25 we dropped down to 52.55 lev­el and are look­ing to poten­tial­ly BD 
      • TV is not nec­es­sar­i­ly high­er at this lev­el so we might see a con­tin­u­a­tion of  this drop in line with a BD
    • 16:40 we formed a ham­mer at the 52.55 range so it will be inter­est­ing to see if we are revers­ing at this level 
      • Oth­er fac­tors are that we had hit the low­er 1.5 SD of the 5M VWAP and almost got close to hit LKC
      • The 30M shows us no direct rever­sal sign yet
    • We are still around the 52.55 lev­el and under the 30M 200MA so I believe that I should focus more on the short side, although the KC looks like it might turn upwards 
      • I’d need to wait and see if we actu­al­ly reject­ed the 52.55 lev­el here and are going to start an uptrend. How­ev­er unlike­ly since we just had a quick move up that got smacked down by bears. But you nev­er know. Trade what you see not your predictions!
    • This 52.55 lev­el might just be where all the bulls come to find their bears to devour
    • And we are test­ing the 52.25 now and as I write this we spiked down till 52 in a mil­lisec­ond so let’s see if this 52 lev­el can hold and if the bulls are sim­ply load­ing up at this lev­el or we actu­al­ly are going to BD 
      • Nonethe­less, if there is a BD I am going to wait for the pull­back to 5/8MA before going short
    • 11:05 (17:05) we dropped to 52 lev­el on high TV of about 600+ and then dropped a bit more the next can­dle with even more TV so we might be look­ing to slow down
    • This is also the 4H 50MA lev­el that we are test­ing as sup­port now. Will it break?
    • I  was think­ing that since we returned to 5M VWAP mean we might con­tin­ue the down­trend and then we shot down now at 11:45 can­dle (17:45) but are pos­si­ble being pushed back by the bulls
    • I believe the mar­ket is still try­ing to decide where to go and extra cau­tion should be exercised
    • Good thing I didn’t act on the assump­tion since we shot down. I was think­ing to short but hesitated
    • It looks like we have the BD by con­firm­ing 52.55 as resistance
    • I will look for pull­backs to trade off of or have we dropped far enough?
    • The tape reads a bit faster than usu­al so not com­fort­able with this yet but I’ll see and be extra cau­tious in tak­ing anoth­er trade
    • Next sup­port area would be the 49.50 dol­lar mark. HIs­tor­i­cal­ly we bounced off this lev­el as we did last week
    • We are hav­ing high­er TV around this lev­el of 51.30 and PA looks to being pushed back but we are still in short territory
    • We can see that every swing in the down­trend has been get­ting big­ger which could indi­cate a shift in direc­tion on the hori­zon and I should be extra care­ful to short since the short term down­trend might be over
    • 12:30 (18:30) we are now test­ing 50.50 lev­el and are look­ing to break WPP at 50.822 as well
    • High TV of about 1300 at 50.50 lev­el but we need to push back fur­ther and hold on for about 17 more min­utes before I can think of tak­ing a long since we are still very much falling and I should be look­ing for a short entry
    • We are 100 ticks away from last week’s low of 49.50 so if we are going to reverse into a medi­um term uptrend this would be a good point to cre­ate a HL on the high­er time frames

• 13pm (19:00) NEWS FLASH

• Saud­is Back Mod­est OPEC+ Out­put Cut, Don’t Want to Shock Market

• • • • Al-Fal­ih says a cut of about 1 mil­lion bar­rels a day adequate
      • Cru­cial details remain unre­solved as min­is­ters meet in Vienna 
        • No specifics on shar­ing of the cuts
  • We are look­ing at a pos­si­ble bot­tom here on the 5M chart as PA is cross­ing the 13MA 
    • I resist­ed the urge to take a long posi­tion since the trend is still very much down
  • When we pull­back to the 5M VWAP mean I’d be look­ing for a rever­sal candle 
    • But we broke it
  • We are enter­ing the KC again and I’d be more com­fort­able tak­ing a long posi­tion after we pull­back to 51.30 lev­el and CAS first
  • We didn’t pull­back perse but we did move high­er to what now looks like a V‑shaped pat­tern on the 30M. I’ve seen this pat­tern many times before using the VWAP and MAs and it’s inter­est­ing to see how the pat­tern devel­ops in rela­tion to these 
    • I’ll include this in my Playbook
  • NY is open­ing in 20 min­utes so I won’t be trad­ing then since I only trade the Lon­don ses­sion for now
  • Right before NY opened we had a drop to the LKC on the 5M and we might be look­ing to test that 51 lev­el again
  • NY opened so that’s it for me today

My goals for the day (Dai­ly Report Card)

• Only take 4 trades
• Only take PB setups (swing rever­sal, swing rever­sal with con­tin­u­a­tion, squeeze)
• Only trade what you see

Trade Man­age­ment

Explain what trade you put on (include price, SL, TP) and what your thoughts are dur­ing the trade

• T1

• Why? What do I see?

• • • • Swing Rever­sal with Continuation
      • We had reject­ed the 53.55 lev­el and quick­ly reversed
      • Then PA broke UKC and CAR with a longer upper wick can­dle so I short­ed with a small posi­tion at 52.672

• SL

• • • • SL I put over the 13MA to be safe at 52.837 but if it had jumped back up on the sec­ond can­dle I’d tak­en myself out earlier

• TP

• • • • 52.331 under the body of the clus­ter of can­dles on the 30M

• Trade Man­age­ment

• • • I felt con­fi­dent going into the trade and when we had hit 52.55 lev­el I was look­ing for a way out and I man­u­al­ly cov­ered at 52.564
      • I thought 52.55 could have been a tough lev­el of sup­port for the mar­ket to crack so I covered
    • Why didn’t I allow my TP to get hit? Because I am learn­ing this par­tic­u­lar trade a bit bet­ter and try­ing to get more con­fi­dent in it. I haven’t back­test­ed this set­up a lot yet.

• T2

• Why? What do I see?

• • • • Swing Rever­sal with Continuation 
        • I saw that we pushed back hard on the 30M chart reject­ing the 52 lev­el for now with a pos­si­ble move to CAR 52.55
        • Also we had moved under the LKC and hit the low­er 2.0 SD of the 5M VWAP and thus a pos­si­ble rever­sal would be possible
        • So I took a small long posi­tion at 52.362

• SL

• • • • Below pre­vi­ous can­dle at 52.167

• TP

• • • • 52.515 but cov­ered man­u­al­ly at 52.445

• Trade Man­age­ment

• • • I think I did good to trade small­er today and build my con­fi­dence first
    • What I did not do good is that this was the pull­back to 52.55 lev­el to CAR and thus I should have just looked for short oppor­tu­ni­ties and not have gone long. Stunts like this will cost me a lot on the long run.

• T3

• NOT TAKEN

• T4

• NOT TAKEN

Trade Review

• Did you let your trade play out or did you cov­er or stop out soon­er? If so, why? 
  • I cov­ered quick­ly on both trades because of hit­ting a cru­cial lev­el so that then begs the ques­tion if my TP lev­el was actu­al­ly war­rant­ed in the first place and why did I not set it at that lev­el that I myself cov­ered at? Well, I think the rea­son is that 1) I’m still try­ing to get more con­fi­dent in trad­ing this way and the setups, 2) at this point I am hap­py with tak­ing some prof­its since my goal at the moment is to just take one good trade at a time and let­ting my TP rules play out is a goal for anoth­er time in my opinion.
  • I showed good restraint in not over-trad­ing and believe me I want­ed to take sev­er­al more trades but I think this only tak­ing 4 trades rule might be a good one to stick with for a while. It makes me more crit­i­cal about what trade to take.
  • I did have the thought that if this restraint was actu­al­ly a restraint or that it also had some­thing to do with fear of try­ing. When I am not in a posi­tion I can’t lose mon­ey right?! But I think that even though it might have played a tiny role in the back of my mind it was more try­ing to take one good trade at a time.
  • Things I could have done bet­ter are: 
    • Get­ting into my posi­tions earlier 
      • But like I said I am try­ing to get more con­fi­dent first and are look­ing for more con­fir­ma­tion before I enter a trade
    • Since we had estab­lished a down­trend on the 5M I should have been more alert to pos­si­ble short­ing opportunities 
      • There was a good one at right after I closed my long posi­tion (which I should not have tak­en) and because of that I don’t think I was focused on that short opportunity
      • So les­son here is deter­mine the trend and then only look for oppor­tu­ni­ties fol­low­ing that trend. If I had that would have been a nice 110 pip drop 
        • Live and learn my friend
  • Anoth­er good thing I did was tak­ing small­er posi­tions than what I nor­mal­ly do

Dai­ly Report Card

• Only take 4 trades 
  • I only took 2 trades today and I am hap­py with that. Both of them turned a profit. 
    • One 11 pips and the oth­er 8 pips
• Only take PB setups (swing rever­sal, swing rever­sal with con­tin­u­a­tion, squeeze) 
  • I did only take my setups and I will back­test these setups more to get more con­fi­dent in them. Also, I am going to imple­ment a lev­el­ing sys­tem to give me the right to trade bigger.
  • I want to have 5 con­sec­u­tive up days before I trade bigger
• Only trade what you see 
  • I think I did well in this depart­ment. I do got­ta say though that I saw the trend chang­ing and going back up but since we were still in short ter­ri­to­ry I didn’t take those trades. I will go back and review what I did and how I could have done it better.

Feed­back?

Any ques­tions or feed­back you might have please feel free to leave a com­ment or con­tact me directly.