A heads up on gold came from one of our community members on our Live Trading Day 7 June 2019, when the Non-Farm Payroll numbers are released.
Structure on a Weekly timeframe indicated gold may be strong for a while and formed just prior to our bearish call on oil. Long gold short oil gave us a delta neutral trade and turned out profitable for both.
A six-year inverted head and shoulders (iH&S) along with an upside HVF built confidence for a gold bull run targeting somewhere near $1,560 and an iH&S target of $1,650

We highlight why we are now bullish gold after gold-bugs continued assertions for gold. The reasons for their bullishness is right but their timing was wrong and we highlight why in this video.

$1,350 was a Key Level for gold and a 3-year squeeze now coming to an inflection point moment.
Structures set up across major currencies and targets revealed: XAUEUR at €1,685,
XAUGBP at £1,500,
XAUJPY at ¥180,000
XAUAUD at $2,247

A key video highlighting that in a recession gold goes up and oil goes down – our reasoning behind the gold long and oil short, delta neutral trade.

In major recessions gold goes up on fiat proliferation and anticipation of interest rate cuts and oil down on diminished demand and productivity.

The video goes on to illustrate the magnitude of the debt crisis of 2016 and the time of the China accord using a gold/oil comparison. This was when China’s demand for oil plummeted and oil traded into the low 20s. It brings into perspective how much bigger this event was than the 2008 GFC.

The price action structure indicates that there is the possibility for another super spike in gold/oil which gave us basis for our oil short call of 2020.

Gold climbs in the face of diminished growth

Gold near highs on hints of Central Bank stimulus and Middle East tensions (oil)

We scenariocast a third impulse to complete inside a 15 year Falling Wedge structure before a possible resumption to the upside. This third impulse gives us a basis to call a fall in the price of oil.

Auxilliary trades related to oil showing weakness.

Carnival Cruise Line (CCL) had been forming an iHVF over the past six months pointing to a possible spill from around mid-June to July 2019 based on oil’s macro signs of weakness.

CCL (4H)

Spilla-Thrilla

CCL triggers right on time and fell hard.

Subsequent strong recovery but did not invalidate the setup.
Eventually it made it’s HVF Method-derived and pre-determined target of $30.91

Plains All American Pipeline PAA, For whom the Grandfather clock tolls CCL, WFC Update

https://youtu.be/qTFI2kn4_jM

We’ve been here before…

This is not our first time trading Carnival Cruise Lines.
See our call to trade CCL to the upside from November 2014  that saw a handsome 77% gain.

CCL November 2014 long call

Aramco had their IPO approved on the 3 November 2019.

We do not hold the view of great benevolence of the Saudi royal family surrounding the oil wealth of the nation. The Aramco IPO further supported our opinion that this could indeed be close to a top call prior to a demand destroying crisis for oil.

Statements of wanting to share the wealth of the nation with the citizenry suggested to us was a classic case of a top call, handing the bags of this new “benevolence” over to the citizens at the worst possible time, only to recollect them at the bottoms in a financially repressed time. This was our house view. As it turned out, it was indeed very good timing for that event to have taken place for the “insider” Saudi royal family wealth.

Our Premium Community gets first dibs on any trade ideas. Those in the Community who elected to participate in this trade were already positioned and in the trade before we went public with our short calls on PAA and CCL.

PAA (1W)

CCL (2D)

See our video below for the public call on PAA

US Indices Higher on Tech Big Data Thieves, PAA, CCL, USDKRW, China A50

https://www.youtube.com/watch?v=CkxRgCoNL5Y

The news before the news with HVF Method

At Anarcapulco 2020 we made our public call of the potential of a major crash in the oil price to single digits. PPI were underpricing for single digit oil.

USD/WTI (6W) Falling Wedge modelling for the single digit call 

One of the presentation slides (above) from Anarcapulcho 2020. The first red column illustrates the subprime crash of 2008, the second column shows the period where China loaded up on debt to become one of the most endebted countries in the world and bookmarked by what Jim Rikards called “The Shanghai Accord”

The news before the news: Oil 2020 12th of February

Oil gapped down on open with Brent falling more than 25% on a Russian and Saudi oil glut. Supply over demand sees the price plummet.

USD/WTI CRUDE OIL (2H)
The infamous day oil gapped down.

Our YouTube livestream on the night of 8 March 2020 when oil gapped down on open.

Oil Gaps $9.5 Dollars in Russia/Saudi Glut

Headlines across the world light up on news of the crash and our Oil trade call is already well on it’s way to target.

Oil crashes down through our target going to zero on the cash market and negative $42 on the futures.

USD/WTI (D)
Oil went sub-zero on the 19 April 2020

The Greatest “Coincidence”
Post crash synopsis and the implications. We setting the stage for an incoming currency crisis waiting in the wings which subsequently transpired.

The Reset season is in.. Here is the real news before the news

Our PAA trade ws closed at the pre-determined target of $3.19 with a great Risk Reward Ratio of 28 on an early entry 24.50. Early entries to trades are an advanced technique with the HVF Method. A more speculative entry at $25 could have even squeezed a ridiculous 100+ RRR.

PAA trade details:
Stop: 25.26
Early Entry: 24.50
Take profit: 3.19
RRR: 28.04
86.98% market cap decimation

HVF Method can also give you a second chance on a trade idea. The PAA trade allowed for a second chance entry at $19.54 which would have still reaped a 2.86 RRR, or with some judicious stop placement could have seen a 4.61 RRR.

PAA (1W) target made

PAA – Plains All American Pipeline, 82,5% MC short closed

Entries were taken across multiple platforms using spreadbets and options. The table below illustrates PNL taken on one of the options platforms.

Tullow Oil (TLW) Single digit target attained

The multinational oil and gas exploration company hits single digits and our pre-determined price target £10.086

TLW trade details:
Stop: 2.506
Entry: 1.967
Target: 1.067
RRR: 1.67

TLW (2D) target made

Tullow Plc, TLW – Short to Single digit home & Hosed

A retrospective draw illustrating the timeline of events from 2019 leading up to the crash.

An over reaction in price action to downside usually manifests an equal and opposite reaction to the upside. This presented a good opportunity to buy into oil.

Our Falling Wedge structure from 18 September 2019  scenariocast the potential to go long after a fall in the price of oil  for which the subsequent reversal played out.

The Great Oil ‘Rig’, Is now the time to Buy Oil – From Mr Oil Short at $64

As oil production plummeted in August of 2020, investors moved quickly into the safe haven of gold and silver as a hedge against a potential increase in inflation and a weaker Dollar. Canada’s oil rig count down over 86%!

In the months oil had been plotting structure for its future crash, gold had been setting up tradable upside structures which reinforced and validated our scenariocast for oil and call for short oil long gold. This provided a delta neutral positioning to reduce risk.

Gold will be covered in a separate case study, but provided a 50% move in approximately one year to our target of $1,508.

Gold/Oil (1W) setting up structure for an upside move prior to the oil crash.

Gold/Oil (1W) post the break saw extreme Overperformance well past our target levels.

After a fall from 60’s to single digits, now calling for three-digit oil?

We now pivot to a macro time frame bull, especially on energies as well as commodities generally. At the time, this was on the back of a possible bond market top, debt market downturn and a possible series of interest rate hikes, all due to the lack of sound money.

The oil price structure played out as we had drawn our scenariocast from September 2019 with a  move looking to break an almost two decade Falling Wedge with high momentum in one of the most inflationary environments that exists.

Oil for 3 digits coming sooner than you Think? Energy Market Dive

After its fall out of the bottom of the Falling Wedge to a technical floor of zero, which we refer to as a Type 2 Falling Wedge, oil recovered over the next few months.

A break of the macro time frame Falling Wedge confirms our bias to the upside and our modelling for a call for 3-digit oil.

USD/WTI (2W)

USD/WTI 2H

As an epilogue to the final capitulation to the low levels for oil and break of the Falling Wedge, we asserted on the 8th March 2022 that oil had made a top at $129.47 on the 9th February 2023.

In this view we illustrate: a breakaway from the Falling Wedge (it gapped on lower timeframes); the running and holding above $100; the subsequent battle to retain that which led to an ascending broadening structure that is sitting on a bullish green pole.

This is classic HVF Method for the expectation of a reversal.

Calling it at the time

USD/WTI 1H

In the rally that formed part of a break of the macro Falling Wedge into the levels above $100 there was a final exhaustive gap up that was filled on the downleg with a subsequent clinging, grinding price behaviour in and around the splitter of our Ascending Megaphone, which is very typical in HVF Method for price weakness to subsequently occur. The break occurred in the $126 to $124 range of the Megaphone splitter consolidation area shown as the tight channel in pink. The price subsequently spilled even further breaking the Megaphone Basing Ascending Grindline at approximately the $116 level.

This exhaustive behaviour between the 6th and 10th March 2022 was indicative that the oil markets had topped. This was a market we were observing closely and even suggested that oil’s upside had exhausted and a downturn was due.

Looking forward to today (9th February 2023) oil is trading $75 and has never made another high.

This chart illustrates the high call where a stop loss was placed at $129.47

Having called the collapse of oil to single digits, and the subsequent reversal, we captured the high of the rally that still holds true a year later, to where we are now (Ferbruary 2023) trading down at $75 along with talk of recession and tightening interest rates in a far more muted and contracting global economy.