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WTI multiple time frame analysis: consolidation, continuation

 WTI outcome of geopolitics, technical setup

In geopolitics, the keyword for current WTI rally is ‘energy’ because of Syria-Iraq (crude oil) and Ukraine (natural gas). This is a narrative going on that is unlikely to go away in the near future and has plenty of room to escalate further. Technically, it is also ready for a big movement upwards after a long period of consolidation. We look at 4 different time frames here to understand the big picture from price patterns that are printed. With these in mind, clarity will help us steer away from the day to day volatility that is evident in the hourly chart.


Weekly chart: multi-year consolidation following uptrend

WTI weekly chart

Clear consolidation-continuation setup

  1. Years of higher lows indicate that this is an uptrend in the big picture.
  2. Price moved sideways between 2011 to 2013. This is a consolidation pattern.
  3. 2014 is a part of this consolidation. If price breaks northwards, it will continue upwards.


Daily chart: multi-month rally, price continues after consolidation pattern

WTI daily chart

Throwback levels to test: April high, May high, resistance trend line of triangle

  1. Daily chart is what the weekly chart may turn out to be.
  2. Multiple-month rally after price bottoms in January marked by higher lows.
  3. Three month consolidation in March, April and May visible as a triangle pattern.
  4. Price has broken out decisively from this triangle which is a sign that continuation takes hold.
  5. At the breakout, steep price rally looks like a flagpole so we can expect a potential flag/pennant continuation.
  6. Price may throw back to test the higher of the triangle pattern (former resistance turns support).


4-hourly chart: confluence of horizontal supports, Fib-R levels

WTI 4-hourly chart

Plenty of supports available

  1. Supports come from Fib-R 23.6% of flow A, Fib-R 38.2% of flow B and then monthly highs from April and May. Lower below is the top resistance trend line that forms consolidation triangle we saw in daily chart.
  2. WTI is doing consolidation in second week.


How to trade WTI with these setups?

WTI hourly chart

Day to day trends do not persist so traders may have to limit to intraday setups

The higher and lower time frames for WTI show opposite pictures. Higher time frames have clear patterns, supports are shown clearly and trend bias is available. This hourly chart is however marked by steep intraday swings but unclear trend on a day to day basis.

In this situation, can choose ONE of the two following plans:

  1. Look to ride uptrend based on all the high time frames and select price triggers at support printed on H4 (long).
  2. Make intraday trades with hourly chart or below and aim to catch a move driven by strong momentum. Do not hold the trade overnight (plan according to lower time frame).

In other words, be prepared to hold positions for a very long time or very short duration intraday only.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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