Crude's tiresome game of tiddlywinks tripped a 'mechanical' short two weeks ago when the September contract rallied to the green line (x=76.86). A portion of any multi-contract position would have been covered ahead of last week's rally, although there was no indication of any interest in the trade in the chat room. Trade possibilities aside, the implicit assumption of my analysis is that this is yet another rally that lacks the gumption to push above the bearish pattern's 'C' high at 83.59.
Silver will not be able to avoid telling us what is on its tiny, fevered brain when it connects soon with the red line, a midpoint Hidden Pivot resistance at 25.45. If buyers pulverize it, that would shorten the odds of a further move to as high as 28.56, that pattern's D target. There will likely be good opportunities to trade with and against the trend on the way up, so if you trade this vehicle or an ETF equivalent, stay closely tuned to my tout updates and the chat room. _______ UPDATE (Jul 19, 11:55 p.m.): A reverse-pattern short from the red line could have produced a quick profit of as much as $1100 per contract (60-min, a=25.30 at 6:00 a.m.). The fact that the futures ended the day above our 'c' plant says they are going higher. _______ UPDATE (Jul 21, 12:15 a.m.): Thursday's fright-wig selloff may be the start of the real thing, since it generated a persuasive impulse leg on the hourly chart.
Silver has more stubbornly resisted the tug of gravity than gold, but the 21.44 downside target remains a logical short-term price objective nonetheless. An unexpected pop to 23.90 would trigger a 'conventional' buy signal, but until such time as that occurs, we should trade this contract with a bearish bias. Although it seems unlikely the 22.34 low recorded on June 23 will prove to be an important one, it is capable if it endures of launching the futures to as high as 28.56.
September Crude's balky descent is still targeted most immediately on D=78.73, which if achieved would probably correspond to pump prices below $3 gallon. The felicity of this might not last, given that the largest commodity market on earth has become just another carny crap shoot made so opaque by refiners and cartels that even the Houston Chronicle's intrepid energy reporters can't quite explain how the rip-off works. The pattern is certainly tradeable even if the daily-chart version of it has yet to yield a 'mechanical' short. Exploiting it profitably will take some 'camouflage' and elbow grease -- on your brain, that is -- provided you've got the chops to rein in entry risk to no more than around $180 per contract. _______ UPDATE (Aug 23, 6:30 p.m.): The October contract appears headed toward a 'voodoo' level at around 97.50 whence a potentially tradeable turn could come. This would NOT be an actual reversal point, just a place to anchor an rABC set-up.
Crude would trigger a 'mechanical' short if it touches the green line x=96.15. However, because the impulse leg was such an agonizing slog, I can recommend this trade only to subscribers who know how to cut the implied theoretical entry risk of $23,000 on four contracts to perhaps a tenth of that. It would require close attention to 'camouflage' opportunities on the sub-15-minute charts, aka 'camouflage. Merely spectating will have its rewards, since the next leg down should help snuff inflation at the pump as well as the unchecked greed of Big Oil. _______ UPDATE (Aug 15, 7:54 p.m.): Use the 81.79 target shown here as a minimum downside projection for the near term. If this Hidden Pivot support fails, the next step down would be to 78.93, calculated using A=111.14 from June 29. _______ UPDATE (Aug 18, 9:27): The failure of bears to reach p2=84.66 of the pattern shown in the thumbnail inset suggests it is on its way up to at least to the green line (x=96.11). It would trigger a 'mechanical;' short there, stop 101.85, but I am not recommending the trade because of the weakly erratic nature of the A-B impulse leg.
I'd advised against bidding 'mechanically' at the green line if September Crude should revisit it, but Friday's impulsive thrust was powerful enough to suggest that 'sloppy' seconds could produce another $5000 winner like the one that played out over two days last week. That implies a ride from the green line (x) to the red (p), a climb that doesn't look too challenging when visually imagined. Regardless, and unless there's a swoon exceeding C=88.23, the 108.25 target will remain theoretically viable. _______ UPDATE (Aug 1, 10:48 p.m.): Yes, the plunge to the green line has triggered a mechanical buy, the second such signal from this pattern. My gut feeling is that the futures will achieve p=98.24, good for a one-level ride, but I am not recommending the trade unless you know how to 'camo' the entry risk down to perhaps 5% or less of the implied $20k (on four contracts) if C=88.23 were to be stopped out. ______ UPDATE (Aug 4, 10:54 p.m.): My gut feeling was wrong, for oil is weaker than I'd imagined. Even so, the September contract should get a bounce from here, since bulls got stopped out with today's dip below C=88.23 of the reverse pattern.
The selling that ended the week brought the futures to within $1.00 of a 'mechanical' buy at the green line (93.24). The trade rates a '5.0' and would therefore require cautious handling via a 'camouflage' set-up on the lesser charts. The 5.0 rating means I think there's a 50% chance the futures will rally from the green line to at least p=98.24, where a partial profit could be taken, before falling below C=99.23. My hunch is that crude will be subdued this week, given its failure to exceed some small peaks recorded in the second week of July. A modest bullish offset is that the rally in the first half of the week slightly surpassed its 'D' target. _______ UPDATE (Jul 26, 6:55 p.m.): The mechanical trade triggered in the middle of the night, producing a quick theoretical gain of as much as $5,000 per contract upon exit at p=98.24. Two subscribers reported jumping on it, although not in sufficient detail to warrant a tracking position. The 108.25 rally target shown in the chart remains theoretically viable, but I'm not recommending a second mechanical entry because I doubt it would be another easy winner.
Sellers cracked a clear and compelling midpoint support with such force on Friday that we should assume August Silver eventually will make its way down to the 16.53 target shown in the chart (inset). For now, though, let's use p2=18.06 as a minimum downside objective, even if the futures managed to close Friday above p=19.59. What would it take to mitigate the severity of this outlook? At the very least, I'd say a run-up exceeding 21.57, where a double-top was created on the hourly chart on, respectively, June 23 and 26. To be even more sure, we should stipulate that the rally hit 22.07, surpassing a peak recorded on June 16 just ahead of this continuing cascade.
The bullish 'reverse' pattern shown is equivalent to the one given in the gold tout just above. It shows promise for 'mechanical' bids not only because the pattern itself is less visible to the riff-raff than a conventional ABC, but also because the bombed-out low (c) will cause most traders to think the rally is corrective. I do myself, but that wouldn't stop me from leveraging the pattern to get long if price action sets up the trade the way we require. The precise stall at p could also prove useful, since it augurs a tradeable pullback from 'D' precisely if the target is reached. _______ UPDATE (Sep 8, 8:56 p.m.): Let's shift our sights south, since the futures tripped a theoretical sell signal today. The more promising trade will entail bottom-fishing with rABC if the downtrend hits p=23.05, so stay tuned.
Short covering on Powell's speech ripped through midpoint resistance at 23.83 with such force that there can be little doubt the 24.35 target will be reached. A swoon to the green line (23.56), however unlikely, can be bought 'mechanically', provided the futures have traded no higher than 24.20 first. A red-line bid would be expert play, but I'll leave it up to you -- and an extra note of caution if it triggers Sunday night. As always, a decisive move past D would imply a larger uptrend is at work with a correspondingly higher target. ______ UPDATE (Sep 1, 7:27 p..m): I'll go about three inches out on a limb with a prediction that December Silver will achieve the 24.70 target of this pattern sometime soon. It hasn't quite reached the 24.35 bigger-picture target of the pattern referenced above, but it has nonetheless pushed past the midpoint Hidden Pivot of a lesser one, This is mildly bullish, as the chart tries to make clear. ______ UPDATE (Sep 2, 11:23 p.m.): So much for giving silver the slight benefit of the doubt. After penetrating 'p' to the upside, the December contract scuddled sideways for a while and then dove on the opening. It did not penetrate the 'C' low of the bullish pattern, but it did trigger a 'mechanical' buy at x=24.00 that I had not recommended; nor will I ahead of a three-day weekend.
