With all the recent headline news for oil, many have missed the trap on the daily chart for the WTI contract for June which has been well and truly sprung following the dramatic price action on Tuesday this week. A dramatic one which saw the April contract move to negative prices while the forward contract sank to a low of $6.50 per barrel. However, it is the volatility trigger coupled with the extreme volume which signalled the reversal loud and clear for two reasons.
First, the indicator itself works on the average true range and is triggered when the price action has moved outside this range. It appears as a purple triangle above and below. For it to appear in the daily timeframe is unusual and therefore signals a dramatic move. Second, when it does appear, we expect one of two things to follow. Either a reversal or congestion. Finally, given the extreme volume associated with the candle and the depth of the wick to the lower body, this signals strong buying in amongst the heavy selling. Given the current uncertainty coupled with the lack of demand we can expect to see oil trade within the spread of this candle for some time, if and until demand returns or supply agreements are reinstated. It was interesting to note yesterday’s effort to rally on falling volume from the previous day, and as such the current rally looks fragile.
Finally, note the trend monitor indicator which has maintained the bearish sentiment throughout, even through the congestion phase of earlier in the month.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
Hello Anna.
I have been thinking about getting the quantrum heat map, but i don,t have enough monitors yet, and i can,t get anymore just yet, because my p,c shops have run out.
I trade with IC Markets out in Aussie, but i live in the Uk on the south coast, at the moment i,m in the red by £500.0. There are are plenty of so called gurus on such things as Telegram app most idea,s on there don,t work out.
I like to swing trade as much as possible, but i must admit at the moment because travel restrictions not much of swing trades around, that,s were the heat map would be useful.
I see you trade with ninja trader, would i be able to trade with them as i live in the UK?
Hi Chris – thanks for getting in touch and happy to help and yes you can certainly use NinjaTrader in the UK with no problem at all, and we have plenty of customers who are UK based on NinjaTrader. It’s an excellent platform and we recommend the Kinetick data feed, but there are others. And of course the currency heatmap is available for both NT7 and NT8 and covered by the one licence, so you decide which version you would like to use. Hope this helps – regards Anna