During last few days I've had quite some people (both professional investors and retail guys) asking me if I think the time is finally here to start bottom fishing in oil, or if we should really start to buy some now.
I gave, and I can still give two answers for the questions:
1. Nope, I still do not see any obvious sign of reversal, pull back or counter trend swing to start. Not even one signal! 2. Everybody does whatever he/she wants. You can try to do the bottom fishing if you can live with it's short and long term menthal consequences (both are negative effects btw), but that is not a planned trading based on signals and on a well defined trading plan, just a gambler's bet that sooner or later the "oversold" Oil will show correction.
Now I have few questions: - Why are people so much tempted to catch a falling knife and to try to perfectly call bottoms or tops? Does it make any sense? - What happens and how will you feel if you buy at 42, but you get stopped out at 41, not to mention if it later trades above 43-44? Will you re-enter at higher price with such a confidence you did the bottom fishing? (maybe did it already few times on the way down here) - Which one feels as a bigger pain for you: trying to buy few times calling it a "possible" bottom, then lose all the stops, or if you enter long only at higher level, but with higher probability set-up, which means of course you had to stay out of the first 5-10 % move from the bottom? (which type of "loss" makes you more angry?)
I could go on with questions like this. Instead let me point out few things:
- If you are a trend follower, you see Ichimoku works extremely well on trending markets (especially together with Heikin Ashi method). It has all the necessary tools built-in to become a succesful investor. So try to trade only, when your system gives you a high probability trade signal.
- Most important message: Based on any simple concept of a trend, me and you, or anybody else will realise more or less the same time when this mkt will try to turn around for a pull back with higher probability. No systems or methods on Earth will be able to tell you, me or to anybody else when and where the final bottom comes! So don't focus on bottoms and tops, until you know the probability of it becoming bottom or a top increases. Instead focus on the trend itself and the change in the trend!
I know there will still be people still asking/telling me after this post: "ok, we understand, got your points, but if you should make a bet or a call, when do you think we should start to buy it?"
So let's give one more "fair" answer: Go back to the very basics of how you determin a trend: downtrend lasts until you have lower highs and lower lows. Consolidation starts and a reversal MAY happen when you don't have a lower low, but you have some form of equal or higher high. That's it. Looking simply at 4H time frame: above Kumo, above 100 WMA, above horizontal supports, so right now it looks like above 43,50-44 (+/-) we could have increasing chance for a short term bullish swing.
p.s.: Of course if anyone has any more questions regarding WTI, Ichimoku, Heikin Ashi, trendfollowing, position sizing, setups, etc. I am always happy to help and answer ASAP.
ความคิดเห็น
Kumowizard
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Please note that September contract will expire tomorrow! October is trading abt +55 cents above spot (Sept)
Looking forward the possible reversal point on 4H chart will be ard 43,50. This is in line with daily Tenkan Sen right now. Please also note that Price has not closed above daily Tenkan Sen (9 days average) since 24/June, when Price was ard 60,50-61,00 !!!
IvanLabrie
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Yes, I covered my sept short.
Great chart and insights.
I have one for you though:
"- If you are a trend follower, you see Ichimoku works extremely well on trending markets (especially together with Heikin Ashi method). It has all the necessary tools built-in to become a succesful investor. So try to trade only, when your system gives you a high probability trade signal. "
This, so much this!
We can resolve this issue creating artificial FX pairs that 'mostly' trend. Answer lies in understanding cointegration and correlation, and the fundamental trends which drive certain currencies' trayectories.
Ex. eurnzd, gbpnzd, gbpaud, gbpnzd. These mostly trend because they are cointegrated but with frequent very sharp spurious regressions where price is directional, for thousands of pips.
If you are better with range trading, audcad or nzdcad will be suited for this.
If these stop working, you could come up with a basket that met your criteria by creating artificial currency pair ratios.
Just an idea. :)
Kumowizard
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You are all right friends. The point is that every trend has consolidations or pull backs, and every trend ends and reverses at some point. But we have to trade these opportunities when we see it is happening with high probability, not when we think it should happen based on our beliefes, or when it looks like happening based on Oscillators or on other measures.
Price action is the most important, all other indicators derive from Price changes.
paulyberndt
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agree with you. Price is the best indicator and knowing what a trend is more important than any oscillator or other trade setup
qnx88
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Why are people so much tempted to catch a falling knife and to try to perfectly call bottoms or tops?
Here is my answer : I got talent ! ye laugh hard when you can, tiktok
FluidicFX
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Thanks for posting your thoughts and such classic good advise.
EvanJones
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Nice idea, couldn't agree more. I see multiple divergence on RSI/Momentum but these are short term corrections and not corrections on the scale on which you mention above. The trend is going down for the moment and I'm guessing that's what most people should assume?
Looking forward the possible reversal point on 4H chart will be ard 43,50. This is in line with daily Tenkan Sen right now. Please also note that Price has not closed above daily Tenkan Sen (9 days average) since 24/June, when Price was ard 60,50-61,00 !!!