We have updated our privacy policy and terms & conditions. Find out more here.
6
 

Energy Futures: Major Upside Breakout Or Bull Trap Ahead?

By  |  Commodities  |  Aug 25, 2013 04:27AM GMT  |   6 Comments
 
AA
+
-
A major upside breakout or major bull trap? — that is the question!

The charts in the energy markets are becoming very interesting. My guess is that the markets will declare themselves for a major move ($15 a barrel in Crude Oil) in the next five to ten trading days. I have no opinion as to which direction the move will be. I have no position as I write this. I expect to be trading energy markets this coming week.

The weekly charts in Crude Oil and Heating Oil show that the energy markets have been congesting for 28 months. Excuse the pun, but the energy markets have been storing a lot of energy. The Crude Oil chart is attempting to complete a massive symmetrical triangle. The market has been trading in the area of the upper boundary of the triangle for the past four weeks.

The Heating Oil chart shows a potential continuation H&S bottom pattern. While some Elliott Wave analysts refuse to accept this as a legitimate pattern, the fathers of classical charting — Robert Edward, John Magee and Richard Schabacker — were willing to accept the configuration as such. I have always been amused when Elliott Wave experts attempt to become classical charting experts.
8.23_CL_weekly
8.23_CL_weekly

8.23_HO_weekly
8.23_HO_weekly

There was another example of a massive continuation H&S pattern in recent years — in Gold. The chart below shows an 18-month continuation leading to the final push in Gold’s historic bull market. The Elliott Wave analyst I had in mind with the above comments mocked me for labeling the weekly Gold chart as a continuation H&S at the time. This analyst, who will remain nameless, was a bear for the subsequent $1,000 per oz. rally in Gold.
8.23_GC_weekly
8.23_GC_weekly

Weekly charts are useful for identifying large patterns. However, daily charts provide the ignition for a launch. The daily Crude Oil chart (continuation) displays a symmetrical triangle. I must comment on the fact that this triangle has six contact points. A six-point symmetrical triangle has the tendency to break out to the upside and then quickly fail. Thus, traders who use this pattern to go long must be very nimble if the market begins to turn down after breaking out.
8.23_CL_daily
8.23_CL_daily

The daily Heating Oil chart displays a small continuation H&S pattern with a very abbreviated right shoulder. Abbreviated right shoulders usually mean one of two things — that more right shoulder development could occur or that the pattern is extremely powerful. Some of the biggest moves I have been involved in over the years came from H&S patterns with abbreviated right shoulders.
8.23_HOV
8.23_HOV

Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add a Comment

 

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Gold
 
 
 
Are you sure you want to delete this chart?
 
Comments
vik puro
vik puro Aug 25, 2013 04:56PM GMT
''My guess is that the markets will declare themselves for a major move ($15 a barrel in Crude Oil) in the next five to ten trading days. I have no opinion as to which direction the move will be''. wow Peter should be given a Nobel prize in Economic sciences...pure genius. Btw i too remember your 65$ crude opinion a couple of months back
Renjith SK
Renjith SK Aug 25, 2013 07:04PM GMT
Any idea about the prices ? Bull or bear ahead?
vik puro
vik puro Aug 26, 2013 09:21AM GMT
bullish till the conflict in middle east diffuses, dont hold ur short position

DEEPAK JAISINGH
DEEPAK JAISINGH Aug 25, 2013 12:50PM GMT
some months back I remember peter said crude will touch 64$ but it went and touched 108.6 on the upside
Renjith SK
Renjith SK Aug 25, 2013 07:02PM GMT
What is your prediction Deepak ? I have been waiting long for a fall below 100. All my investment is stuck in there.
DEEPAK JAISINGH
DEEPAK JAISINGH Aug 27, 2013 03:29PM GMT
my target in rupee terms of 7200 reached today and even crossed and my $ term target is 110$ which will also touch by tonight as it has already made a high of 109.2
 
 
Are you sure you want to delete this chart?
 
 
 

Successfully Reported

Thank you. This comment has been flagged for a moderator.
_touchLoadingMsg