Crude oil was THE commodity to trade back in 2007-2008 when prices rocketed above $145 per barrel then dropped like a rock all the way back down to $35 per barrel leaving many investors and traders either greatly rewarded or dead broke.
Since then the focus of the world has moved to gold and silver as currencies spiral out of control with more and more reasons why individuals and entire countries should focus on owning physical metals rather than eroding currencies.
Just because a commodity is not under the direct spot light does not mean you can’t trade it or make money from it. With that said here is my analysis on how to trade oil if $100 per barrel is reached in the coming trading days.
Let’s take a look at the charts…
Long Term Weekly Oil Futures Chart
Here you can see how oil is trading round the $100 level. When the price is trading below it then $100 will act as resistance and when oil is above then it becomes support.
How To Trade Oil ETF
Intermediate Term Daily Oil Trading Chart:
This is more of a close up look at oil and the $100 price point. Notice how oil has moved higher for an entire month without any real pullbacks and that it has a clean support trend line underneath. If oil sees some big sellers step in here at the $100 – $104 level then I expect the green support trend line to be broken. If that takes place oil could quickly and easily drop back down to the $90-$92 area.
How To Trade Crude Oil
How to Trade Oil Using an Oil ETF
This chart shows a long (bullish) oil ETF along with its price by volume levels. I like to review the price by volume analysis from time to time when nearing a major support or resistance level on a chart. For those who have difficulty finding support and resistance levels then this indicator/volume analysis tool will take most of your guess work out of the equation.
To make a long story short, the longer the volume bars on the left side of the chart are then the more people either bought or sold crude oil at that price. Keep in mind that it does not matter if they bought or sold here… the key to remember is that there are a lot of new positions here and that is where people exit their positions at breakeven because they held such a large draw down over the past few months and just want their money back.
Most traders and investors who trade off pure emotions (fear/greed) would have held a losing position through the August – October selloff and are now going to be more than happy to exit the trade at breakeven and move on to the next emotional roller coaster. It’s this type of trading which allows the non-emotional traders who thrive off of price action and mass psychology to catch price swings in the oil market.
The chart below clearly shows that oil is entering into resistance level and a pullback is becoming more likely each day. Those looking for an etf how to trade oil should look at buying SCO ETF. This oil ETF goes up in value when oil loses value.
How To Trade Oil ETFs
How to Trade Oil and Oil ETFs Conclusion:
In short, oil is becoming overbought meaning it has moved up to far too fast and should have some profit taking shortly. The fact the oil is reaching a century number ($100) I feel there will be a couple days of selling starting soon. Traders looking to play this support trendline breakdown should look at trading SCO oil etf.
If you would like to receive my Free Weekly Trading AnalysisJoin Now: www.GoldAndOilGuy.com
Chris Vermeulen
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2011-11-13 22:51:252014-03-06 12:48:52How to Trade Oil ETFs when $100p/b is Reached
How to trade oil is not an easy thing to do in today’s headline driven market. Even the best oil analysis which may have been correct will still be wrong at times. This is due to the fact that oil has many factors which play into its price. Things likes like extreme weather conditions, geopolitical events, currency fluctuations, economic conditions and supply and demand.
During any time of the day oil traders and their oil analysis stand a good chance of having one of these factors directly affect the price of crude oil messing up their charts.
But, I am a firm believer that these factors (news events) generally fall in line with the overall larger trend of oil. So understanding how to spot trends in oil is a vital part of the equation.
Another important aspect of trading crude oil along with stocks and commodities is for you to understanding how to trade price and volume at an intraday time frame. If you don’t understand candle sticks, chart patterns and volume will get your head handed to you more times than not.
Let’s take a look at some charts and my short video which cover everything you need to know in great detail…
How to Trade Oil Daily Chart Analysis:
Below you can see clearly how the overall trend is down for oil. You can also see the repeated bearish patterns and key resistance levels. In my oil analysis I focus on finding and trading the trend. You will not find me trying to pick a major top or bottom with my strategy; rather I focus on low risk high probability continuation patterns within a trend.
Once the trend stops and reverses there will likely be one or two losing trades as the investment shakes things up and sentiment slowly comes around and shifts to support the new trend in oil.
Intraday Crude Oil Analysis:
This is a chart of Oct 19th using a 5 minute interval. The annotations on the chart explain clearly what I saw and was hoping to see for an oil etf trade setup this week.
In short, I have been waiting for this setup to unfold for a few days now. This report goes to show that if you have the patients to site back, watch and wait you will trade with much less risk. By doing this you reduce risk on your overall position because you can time your entry 1-3 days before oil moves in your favour getting you the best possible price. Also the less time you have to keep your money in a trade the better because of the factors (news events) I told you about earlier. Cash is king! Get my bi-weekly reports and videos by joining my free oil newsletter here: www.GoldAndOilGuy.com
Chris Vermeulen
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Gold Newsletter – April 21st, 2010
It’s been, an interesting week as stocks and commodities claw their way back up after the end of week sell off on Friday. Most of the chart technical are pointing to another wave lower for gold, silver, oil and the broad market.
This next wave of selling would form an ABC retrace pattern on the commodity charts and this pattern is bullish. Also commodity prices would drop to key support levels which would most likely provide a low risk entry point depending on the price and volume action at that time. So lower price is good for the big picture which is higher prices.
The charts below are a quick visual of what I am seeing and thinking…
GLD – Gold Exchange Traded Fund Trading Chart
The gold etf trading fund is getting closer to completing is 4 month correction and start another rally if all goes well in the coming week or two. What I am looking for is gold to hit resistance at $113 and then drop to the $110 level which is a key support level.
SLV – Silver Exchange Traded Fund Trading Chart
SLV etf fund looks ready for a pullback also. Both gold and silver tend to move together and support would be tested here also.
USO – Oil Trading Fund Chart
USO shows that one more thrust down would bring prices to a key support level also.
SPY – SP500 Exchange Traded Fund Trading Chart
Stocks have been on fire the past few months but this rally looks to be getting long in the teeth. After a rally this strong without any pullbacks one has to think that when a correction does start it will be a very sharp sell off. I will point out a few years ago we saw this exact type of price action for the broad market and it continued higher for several more months before actually putting in a large correction. If we don’t see a large correction, then we would see similar price movement which we saw last November and December with the sideways choppy price action and slow rally higher. ActiveTradingPartners.com is a great place to get quality stock picks.
Mid-Week Market Update:
In short, I think the market is ready to finally take a breather. What I am looking for another sell off which will break the low for gold, silver, oil and SP500 last week. If this happens then panic would be triggered washing the market of all the traders who have been buying at these high levels (chasing prices).
Stocks have been very strong and new money continues to push prices higher so we could just see a relatively small pullback between 3-5% and then the rally could continue…. This would work very well with gold, silver and oil as they would be testing key support levels and should be ready for a another upward surge.
It doesn’t really matter what the market does as there will always be great opportunities. Waiting for quality setups requires discipline and focus because it is not very active. I see traders making all kinds of silly trades which chip away at their profits because they cannot sit and watch when they should be.
During slow times I actually focus on learning more about the markets going through charts, inter-market analysis comparing things….. That kills a ton of time and helps make you a better trader in the long run. So if you don’t see a good trade get out and do something fun or educational. Don’t just start trading the 5 minute charts because you want to trade…
Sunday April 18, 2010
Last week was exciting with broad market and gold forming an intraday reversal pattern after a long overbought rally, then broke down though short term key support levels. While this move lower was tough on the pocket book for those who chased the market up the past few days and/or were not moving their protective stops up, this move is good for the health of the market.
This pullback is actually a good thing for us active traders who wait for low risk setups and don’t chase prices higher, but rather buy on the dips in a bull market when most of the risk has been flushed out already. Trading with low risk setups is not the most exciting type of trading because there are not a ton of setups but if one can be patient and wait for these plays it is a very profitable strategy in the long run.
Below are the charts showing what I am currently thinking is going to happen for gold, silver, gold stocks and oil. I will be tracking the market with intraday charts to help pin-point a low risk entry point for a possible short or long position as the market unfolds this week.
GLD – Gold Trading ETF
The chart below is an updated chart which I have showed several times. It shows how gold corrected, bottomed and is now trending back up. This week I will be watched closely to be sure we take a position which has the highest probability of working in our favor if and when a low risk setup occurs.
SLV – Silver Trading ETF
Silver really took a hit on Friday. It is now trading near support but there is not much we can do until we see what happens on Monday. There could be a bounce or more down side, tough to call right now…. And it’s not something you want to be on the wrong side of.
Gold Stocks – Gold Stock Trading
Gold stocks did not drop as much as I thought they would which indicates the market is still very bullish on gold. There is still potential for more downside… so I am letting the market unfold before doing anything.
USO – Oil Trading Fund
You can see oil moved down sharply on Friday and is now testing both a price support level and trendline support. Although this looks like a perfect setup, the market is designed to shake people out of positions before continuing the move. So it is likely for oil to dip which would break both these support levels triggering stop orders. Then the price should drop to the key support level where support should be found for at least a bounce or a new bottom.
Precious Metal & Oil ETF Trading Newsletter:
In short, the market had a nice correction on Friday and the heavy selling volume indicates that we are getting close to a larger correction which should provide two swing trades, a shorting opportunity and a new buying opportunity in the coming days, weeks or months depending how long the market takes with this pullback/correction.
Over the past month the gold and silver markets have taken a good drubbing. Silver has dropped from 19.50 to 15.00 and gold from 1227 to 1044 as the US Dollar has finally rallied after a long drawn out correction.
Since the advent of ETF’s market players have been able to invest in gold and silver for the first time without using Futures and investors have made the gold and silver ETF’s a very popular way of investing in the precious metals. The advantages of ETF’s are many versus buying a futures contract. Investors can hold them for the long haul, there is no contract switching every few months, investors can buy as much or as little as they want and there is no need to worry about a leveraged position. But are there any disadvantages to ETF’s versus a futures contract?
The chart below is the silver ETF with the symbol (SLV). Because the precious metals are a global commodity and one that has been in the spotlight lately, like most commodities they trade on a world wide scale 22-24 hours per day. Since ETF’s only trade during stock market hours there can be drastic changes to price when local markets open up the following day.
The arrows I’ve drawn show how the price of silver has been vulnerable to severe price drops on the open of trade in these stocks. The recent severe correction in silver is an excellent example of how prices can open much lower than the previous day’s close. Technicians call them price gaps when they appear on a chart pattern. Investors who are using the ETF’s to be long the metals call them EQUITY gaps because of the drop in price that occur affect their bottom line.
When investors awake to learn that gold or silver is down heavy overseas, the natural tendency for short term traders is to bail out on the open for fear of losing more money than they already have. Since these ETF’s have been closed for trading about 16 hours previously, big price changes can and do happen.
Now let’s look at a futures chart of silver. The chart below is a 1000 ounce silver futures contract.
Notice how there is only one price gap on the entire chart since the top price in January. That is because this contract trades 22 hours per day and price gaps only reflect the changes that occur from about 5 PM to 7:20 PM EST time. The remainder of the time the market is open somewhere in the world and the globex market is linked to all of them. Therefore an investor can avoid nasty drops in price over night by choosing to trade a futures contract.
Futures contracts are not for everyone as the mini contract has 1000 ounces as a minimum and most be rolled over every three months or so to a new contract. Most of the time there is a few cents difference in price as well and this is called a premium. For someone who is buying 1000 shares of the silver ETF and is an in and out short term trader might want to consider trading futures. The commissions can be much cheaper if you have the right broker charging under $3.00 commissions to trade a 1000 ounce contract which only requires a minimum margin of $1600 to trade $16,000 dollars worth of silver and the cost to fund an account is as low as $5000 dollars to open.
Probably the best advantage is that trading on these contracts begins on Sunday evening (in USA), a full 14 hours before the ETF’s open up for New York trading. On weeks such as we’ve seen this can be a marked advantage, especially when a severe correction begins to develop as the markets reopen from a weekend or Holiday.
Another advantage is the ease of which one can short these contracts. Unlike ETF’s one can short a contract just as fast and as easy as going long. It only requires a click of the button.
What about disadvantages?
Trading in futures is a leveraged game and while the gains can be magnified, so can the losses. However, if you’re already trading 1000 shares of SLV there is no difference. If you’ve never traded futures before it can be at times more emotional. Probably the biggest advantage is the ability to trade with ease and this can cause the user to overtrade and therefore accumulate more losses if you don’t have a game plan.
What about liquidity?
I’ve traded these contracts and have never ever had a problem getting in and getting out. However once in a while these contracts can fluctuate a bit more in after hours when trading is thin. I’ve seen 10-20 cent price rises after the market closes only to pullback to its original price before the markets close for those few hours a day in which there is no trading.
If you’ve been frustrated with your silver ETF when it opens down 50 cents in the morning you might want to look into trading a futures contract instead. But be sure to read up on futures and possibly try a demo trading package so as to get used to the ebb and flow and psychology of trading futures versus ETF’s. They are not for everyone, but for those who are disciplined and experienced traders; futures can offer advantages that the ETF counterparts don’t.
While we are on the subject, let’s take a look at the silver chart from a technical standpoint.
The chart below shows that silver has suffered some technical damage on the charts that should have technicians concerned.
Over the past 14 months silver has been in an uptrend defined by a parallel channel that has recently been broken on the downside and it has done so on heavy volume. As you can see by the chart, silver’s Friday lows were comparable to prices from April 2009, almost a full year ago. The correction from December has wiped out almost a year’s worth of gain in two short months. The break of the lower channel line confirms this downside momentum and has considerably weakened the technical picture.
We can see how the 16 dollar area was a key support level and when it got taken out a lot of stop loss orders were probably lying underneath that target area. Investors who had bought last spring saw all of their gains taken away in a few short months and the panic selling that ensued can be witnessed by looking at the volume spike.
Investors should not be totally surprised. The January/February period for the precious metals tend to form tops in price from which late winter corrections are born and from which spring or summer bottoms are formed. This pattern has been more often than not the modus operandi during the bull market run of the past 9 years.
We can see by the seasonal chart below that this time period is usually met with a sell-off that lasts unto month end. Readers of my past articles have been shown the following chart before in other updates.
As we have stated in the past, the month of February is not usually a good time to be in precious metals and this month’s action confirms that very well.
What about Gold ?
The chart above shows that gold recently took out a very important support area. For a few months the 1075 area in gold and the 105 area in the gold ETF (GLD) has been a key point technicians have been focused on. Last week’s rout finally took that area out. We can see that last week’s lows were below that line and that gold is trying to now climb back above it and maintain price in order to regain its support area. The important thing about a channel or support line is not whether it is penetrated by price but what price does immediately afterward. For the moment gold is trying to make its mind up as to whether it will forge forward here or breakdown to the next support area on the chart.
The next major channel line on our chart is all the way down at the 95 area on the chart. However, if we look at the September high and the October low during this rally we can make a case for support at the 100 area. For gold this would equate to the 975-980 area in spot gold. So at this current moment we remain neutral in the precious metals waiting for gold to make its decision on the next leg it is to embark on. Let’s look at the short term pattern by zooming in on the 60 minute chart of the April Gold Futures contract.
Ever since the December peak at 1227 the gold market has been in a correction that has shaved off about 180 dollars from peak to bottom. We can see that each attempted rally above the moving averages has ended up in failure. Last week, spot gold touched the 1143 area, just 10 dollars shy of the original breakout point of 1033. This return move to the point of breakout is not a rare occurrence in the commodity world and there are myriad examples of such a move before the “big” one came after the breakout. The 1044 area is also the place where India made their large purchase of gold last fall and from which the news launched the market much higher when it was announced they had purchased 200 tons of the precious metal.
Thus there are two key areas for gold to watch for. First a move back above the support shelf of 1075-1090 in gold would at least put gold back in a neutral pattern instead of a downtrend. Then if gold can above the 1100-1110 area it would provide impetus for a potential test of the highs at 1125 and 1163.
In summary, the February time frame is usually a weak time for gold and usually leads to a spring rally. The early peak in December opens up the potential for gold to attempt a March or April rally. In the meantime, one would be wise to watch the current areas of support.
1075-1090 – previous support area we need to get back above.
1010-1033 – The 200 day moving average and the original breakout point.
975-980 – The first support area of the last up leg in price that began in September.
Finally let’s look at the crude oil market.
In my past few updates I have advocated that a great play is to sell some precious metal holdings in early winter and raise some cash into the spring. Not only is this good due to the seasonal tendencies of gold to correct but it allows one to begin to deploy some of that cash into the crude oil market in late February. As you can see the oil market is usually much more seasonal in trend and that time of the year is approaching.
As you can see below, the crude oil chart shows price from March2007, 2008 and 2009. All three times oil turned out to be a great buy. The current pullback from the 83 area got as low as 71 before reversing this week and price is right at the 200 and 50 day averages. Thus the 200 day average is one place we should be on watch for as support. We are close enough now that we should be on guard for a seasonal low. Should there be a selloff as in the precious metals; the 58-60 area would offer a good chance at a seasonal bottom. If the rally has already begun the 200 day average or more importantly about 5 dollars below it would be a good support area.
We are constantly watching for low risk set-ups to get our subscribers into plays like this. Feel free to check this website for my past reports. They have advocated the same strategy as I have in this article. Why not drop by our website and see what we might have for low risk entry opportunities as we await the potential seasonal trend changes and position ourselves to take advantage of them.
Deciphering the SP500 Trend
The SP 500 and the markets topped one day after my Jan 18th forecast to our subscribers that the market had met all conditions for an interim top. This followed my Feb 25th, 2009 forecast for a huge bull market rally which we rode with aggressive stock trading. I am now forecasting an ABC correction likely lasting 3-5 months into June. We have adjusted our trading plans from individual stocks to Leveraged ETF’s to take advantage of the increase in volatility. Our ETF trading is designed to work in high volatility bull or bear cycles and has a 90% historical accuracy rate with profits typically within 24-48 hours of entry. The market moves in very clear herding behavioral patterns, and we identify those early and trade accordingly at David Banister. Here are his latest views, and you can read more at www.activetradingpartners.com/articles
If you would like to receive our Free Weekly Trading Charts and Analysis please visit our website at:
Stocks and metals have been on a steady rise this week. The US Dollar drifting lower has helped to add fuel to the oversold bounce in equities and metals we are seeing.
Stocks – NYSE 65 Minute Chart
Stocks have started to show signs of a possible reversal to the upside. So far this week we have seen the major indices form a higher high and as of today are stuck under the key resistance level shown on the chart below. The rally seen this week has been on light volume indicating there is not much strength behind it at this time.
If buying volume picks up and we see the NYSE break this resistance level then money should start to pour back into the market as the first set up of higher highs and lows will have formed and that is the definition of an up trend.
Gold – 24 Hour Trading Chart Using 8 Hour Bars
This chart allows us to look far enough back to see key support and resistance levels. Today we saw gold sell down with rising volume which is bearish.
Oil – 10 Hour Candle Chart
The Oil fund is currently in the same situation as gold. It had a nice rally/bounce which was expected from the rather large sell off over the past couple weeks.
US Dollar Index – 2 Hour Chart
This chart shows the dollar rally that triggered the recent sell off in gold & silver from Jan 25th to Jan 31st. So far in February, the dollar has drifted lower into a support level and bounced sharply on Wednesday. This is very bullish price action and points to higher dollar prices in the near future.
Stock & Commodity Trading Conclusion:
In short, stocks and metals rallied on light volume which is a sign of weakness. They are both stuck under a key resistance level and selling volume has started to pickup. To add more logs to the fire, the US Dollar appears to be picking up speed for another surge higher in the next couple days.
All of this leads me to believe this weeks rally is just a dead cat bounce and lower prices are just around the corner. But, because the 60 minute intraday charts have made a higher high, the down trend is now in question. When in doubt, just stay out. During possible tops or bottoms I find it best to stay clear of the market, even for day traders unless there are very strong price and volume surges occurring.
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Since the market crash in late 2008 we have seen investors favor quality stocks that pay dividends and have steady earnings. Fast growth companies and equities with physical resources like commodities have also done well.
Let’s examine the monthly charts of gold, silver, oil and natural gas – and observe how they have traded in comparison to their mining equities
Gold – Monthly Chart
Looking at the monthly chart as far back as 2004, we see that gold has formed the same patterns repeatedly. This has created a stair step pattern and allows us to calculate measured moves and a time frame for this to take place.
As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.
Investors around the world are buying gold because it is a physical product which has been proven to hold its value.
Gold Newsletter
Silver & Precious Metal Stocks – Monthly Chart
Silver and PM stocks have been trading in tandem since 2004 and we can see this by looking at a price performance chart of both silver and the HUI index. The interesting part is that the physical commodity silver has held its value better than the stocks during corrections.
Apparently investors prefer tangible investments over stock certificates of mining companies in periods of increased volitility. Lower risk is in the commodity.
Silver Newsletter
Oil – Monthly Chart
Crude oil has held its value over energy stocks for the majority of the time since 2003. And currently, investors are more comfortable holding oil as a safe investment over energy stocks.
Oil Newsletter
Natural Gas – Monthly Chart
Natural gas is the energy sector’s underdog in my eyes. The world has found so much natural gas in the ground and discovered cost effective ways to collect gas that it will continue to see investors move away until inventory start to deplete.
Natural Gas Trading
Commodity Trading Conclusion:
Investors around the world continue to put money into gold which is a universal hedge against inflation. The broad market appears to be trading at a major resistance level. Tops in the market generally take a much longer than to reverse directions than market bottoms. We will not knot for sure if we are entering a top for a couple months as the charts unfold. Now that commodities are trading back at reasonable levels I think they will hold up better than equities if the market starts to correct.
We continue to enter low risk setups and trade with this strong up trend but are aware that we must be protected and focus on the lower risk plays.
If you would like to receive my weekly trading reports please join my reports newsletter:
Chris
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2009-11-22 19:49:102014-03-10 10:57:10Gold, Silver and Oil Out Perform their Equities?
So far this week has been generous with our commodity ETFs moving higher, other than natural gas which is clearly in a bear market. Each of the commodity ETF trading charts below is at a different stage and it will be interesting to see how things unfold in the coming weeks.
Trading ETFs is very rewarding when done properly and using multiple time frames for timing your entry and exit points is crucial. My main focus is on the weekly and daily charts but I use a 30 minute intraday chart when the time comes to actually pick an exact buy or sell point. Below I have provided both the weekly and daily chart so you can see how the same ETF looks completely different on the two time frames.
GLD ETF Trading – Weekly & Daily Trading Charts
The weekly chart a nice multi month rally but is now starting to go parabolic (straight up). When this happens I start tightening my stops so that I can lock in maximum gains. Now jump over to the daily chart and notice that gold has rallied longer than the previous move in early October. It looks overbought and ready for a pullback. Pullbacks on strong rallies like this tend to be hard and fast as stop orders get triggered sending prices tumbling down on heavy volume. My general thought is 5 days up in an investment is given back in 1 down day. This is why I scale out of positions when they are looking long in the tooth and ready for profit taking.
Gold ETF Trading Newsletter
SLV ETF Trading – Weekly & Daily Trading Charts
Silver had been under performing gold for several weeks but made up some nice ground this week. Gold and silver tend to trade together so if gold pulls back I figure silver will also. That being said the weekly chart of silver looks ready to rocket higher for another week or so.
Silver ETF Trading Newsletter
USO Fund Trading – Weekly & Daily Trading Charts
While gold and silver have been moving higher oil has been flagging sideways taking a breather. Both the weekly and the daily charts are aligned for a nice move higher if the trend and charts follow through on their patterns. We could get some tradable action in the next couple days.
Oil ETF Trading Newsletter
UNG Fund Trading – Weekly & Daily Trading Charts
Natural gas is really starting to slide. Wednesday UNG dipped below the Sept low of $8.94 by a couple cents then moved up into the close. Overall it’s not bullish. This could be the start of a waterfall sell off which is a sharp heavy volume sell off that lasts 3-5 days.
Natural Gas ETF Trading Newsletter
Commodity ETF Trading Conclusion:
To sum everything up the gold and silver ETFs are on fire as they continue to surge higher. Being ready for a sharp reversal is important if you want to lock in gains on a portion of your position.
Crude oil is taking its time but looking ripe for a breakout higher. We continue to watch for some action.
Natural gas continues to get pushed down and it’s not looking good for higher prices anytime soon. We are waiting for a shorting opportunity or an oversold condition to play a 1-5 day bounce.
Quick Trading Tip: If you have a position which has done well and has moved up for an extended period of time be sure to draw some trend lines and tighten your stop, or set a stop, under a tight trend line. Sell some of your position (25-50%) to lock in gains and let the core position continue to mature. If you get a pullback to a support level (previous breakout level) you can buy back your other part of your position at a lower price.
If you would like to receive my Free Trading Reports, please optin to my newsletter.
Chris Vermeulen
Disclaimer: I currently own the GLD ETF.
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November – 15th
Commodities continue to perform well as the US dollar tests the October lows. If we step back and take a look at the weekly charts of the gold, silver, oil and natural gas ETFs we can get a better feel for what to expect in the coming week.
Trading commodity ETFs can be a very fun and profitable experience when done correctly. The first things I always analyze are the longer time-frame charts. This allows me to see past support and resistance levels and determine whether the investment is trending up, down or sideways.
Let’s take a look at gold, silver, oil and natural gas.
GLD ETF – Weekly Chart
The weekly trend is crucial for understanding the power behind price movements. We can see that the GLD ETF is in a strong up-trend and that price closed at the high on Friday which is a strong sign. I would expect to see gold continue higher on Monday because of this strong momentum.
We can see that over the past 2 years GLD has formed a large cup & handle pattern which is very bullish. A breakout above the handle will trigger investors to buy gold
as a long term investment and that is what we are seeing now.
ETF Trading GLD
GLD ETF – Daily Chart for Trading the Trend
Using GLD as an example, the trend has been up for several months on the weekly chart. So we know buying low and selling high is the proper strategy for this investment. The weekly chart above shows this.
Buy Signal for GLD – Using the daily chart we focus on buying pullbacks when the price is near a support level and reverses back up.
Profit Taking – I am not a greedy trader so I take profits after a nice run in prices. For GLD a nice short term run is 2-5%. So once I reach that level I start tightening my stops and trend lines to lock in some gains. I do this by selling part of my positions – generally between 25-50%. I let the balance of the position run with the market providing more wiggle room for GLD to mature.
GLD ETF Pivot Low
SLV ETF – Weekly Chart
SLV has yet to breakout above the 2008 high. But the chart is still very strong. If we see the price move above the $17.50 level I expect buyers are going to jump in and push prices up to the $20 level.
SLV ETF Trading
USO Fund – Weekly Chart
The USO fund continues to look bullish as it consolidates the breakout with volume getting lighter. We could see a bounce this week and if we do I will be watching for a low risk entry setup.
Oil ETF Trading
UNG Fund – Weekly Chart
UNG continues to trend down and under perform the market. The last time UNG dropped to this level we had a nice bounce generating a 30% move in 3 weeks. But I don’t think that will happen this time. The price has been sliding lower slowly on light volume. This type of price action is not as predictable when compared to others. I will wait for a proper setup before buying an oversold bounce or shorting after a bounce.
Gas ETF Trading
Commodity ETF Trading Conclusion:
The weekly charts don’t lie. Trade with the underlying weekly trend and you will put the odds in your favor. I use the daily chart and 30 minute intraday charts for timing my trades as those time frames have proven to be very accurate with commodity ETF investments.
WE continue to be hold our golden rocket stocks and GLD fund. If the market co-operates this week we could get some trading signals for both Canadian and US ETF funds.
If you would like to receive my Free Gold Trading Newsletter
The past week in gold, silver, oil, natural gas and the broad market wasn’t anything to write home about. We are seeing controlled profit taking which is making the market choppy. Many traders are getting very bearish on the market which is a good thing in my opinion. According to my market internals, sentiment and volume analysis we should get a shake out (sharp dip) which would make traders exit their positions before the market continues higher.
Some trader’s say we are in a bull market, others say we are in a major bear market. Either way the trend is up on the daily and weekly charts and companies are making money. Buying on over sold dips has been very profitable this year. Until I see things drastically change, this is my strategy for the broad market.
Lets take a look at the commodity sector.
HUI – Gold Stocks Index
Recently we have seen money move out of gold stocks but with the majority of them trading at support trend line we could see some fireworks this week.
Gold Mining Stocks Trading
Gold – GLD Exchange Traded Fund
Gold has been trading sideways as investors and traders digest the previous rally higher. The recent price action looks similar to the September rally and consolidation. Lets hope for a another move higher without getting shaken out of our positon.
Gold ETF Trading Newsletter
Silver – SLV Exchange Traded Fund
Silver is in much of the same situation as gold. We are waiting to see what happens here at these support levels.
silver ETF Trading Newsletter
Crude Oil – USO Exchange Traded Fund
Oil has been making a strong rally after breaking out of is multi month consolidation pattern. We are now looking for some type of pullback or test of breakout for another low risk entry point.
Crude Oil ETF Trading Newsletter
Natural Gas – UNG Exchange Traded Fund
Natural gas is having some trouble breaking out above the multi month resistance trend line. Buying here is a 50/50 bet and I will wait for another entry point before putting our money to work.
Natural Gas ETF Trading Newsletter
Natural Gas, Oil, Silver and Gold Exchange Traded Fund Conclusion:
Overall, the market feels ready for quick snapback to shake traders out of profitable positions. I expect a resumption of the up trend as the market slowly creeps higher at a steady pace digesting each rally with sideways movement.
I know many people are shorting the broad market and that is not something I am willing to do yet. Until I see a drastic change, long positions are my bread and butter. Once the market does reverse, there will be plenty of time to play the short side using the Leveraged ETFs.
Commodities are taking a breather but with our support trend lines nearing I expect some movement this week.
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Chris Vermeulen
http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png00adminhttp://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.pngadmin2009-10-25 13:19:592014-03-10 10:45:23Gold, Silver, Oil, Natural Gas ETF Trading