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HVF Method for calling the huge oil trade of 2020

Our 2019 chart for calling the oil short for 2020

How did we make the call on oil?

This page outlines the course of events leading up to the crash in the oil price and paints a picture of how, utilising HVF Method on macro time-frames, we are able to accurately scenariocast when the crash may occur and specific target levels projected into the future for trade opportunities.

It is almost uncanny how HVF Method is able to map out events and reveal “coincidences”  that dovetail with macro economic and political events. Explore the timeline below to see how the story unfolded.

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Oil trade timeline and event milestones

10 August 2019
10 August 2019

A prelude to the 2020 oil crash. Our bias to bear on energies

Signs are already showing. In the YouTube below we set the scene and reasoning for our bearishness on the energies discussing oil, gas.

We present a teaser for a forthcoming trade call to be made public for PAA (Plains All-American) with a potential 6/7 or 85% marketcap decimation.

Our bearishness on oil and energies in general  at this point is based on inverted structures forming on the macro time frame charts and the general poor state of global economies. The discovery of oil and gas reserves in the Eastern Mediterranean sees strategic maneouvering between the US/EU and Turkey/Russia with sabre-rattling threats of a Turkish takeover of Cyprus to secure the energy field in the Levant basin.

We see this as an attempt on the part of the EU to diversify away from reliance on Russia for energy and possibly create an energy (oil) glut.

Original long form video can be found here:
Two trades – Plains All American and Oil

2014/15
2014/15

Previously on oil with HVF Method....

The oil crash call of 2014 post subprime, made prior to the price collapse using HVF Method. Trade triggered on 14 August 2014 with an expectation of overperformace to extreme lows.

Brent (W) trade triggered

Brent (W) post-trade target made with Volume analysis forming the basis of our next call for a resurgence in price..

 

8 April 2019
8 April 2019

PAA showing signs of weakness

Plains All-American (PAA) is a pipeline company engaged in moving and storing oil and other petroleum related materials.

We took speculative early short positions on what we call an Early Entry (Advanced HVF Method) on structure that indicates weakness and that a possible fall in PAA price may be imminent.

Bear in mind this is almost one year ahead of the actual oil crash. As part of the oil compex, PAA proved to be a good hunting ground for fruitful shorts with HVF structures indicating the potential for a marketcap decimation of 85+%

A potential RRR of 83.54 on this speculative entry.

PAA (Daily)

My personal, speculative Early Entry for PAA on a spread-betting account at $25.824 with a stop at an HVF Method-derived value of $27.764

14 September 2019
14 September 2019

Aramco drone strike. Stop out and re-entry

Drone strike on Saudi Arabia’s Aramco oil refineries demolishes Saudi oil output.

This event momentarily spiked the price of oil which stopped me out of the trade necessitating finding a re-entry price level. This was achieved by observing the subsequent broadening price action for which HVF Method provides specific theory and approach to its analysis. A massive daily rejection candle on the 8 January 2020 gave us a clue and the break of our broadening structure invited us to enter the trade again in and around the $58 level.

USD/WTI 1D
Fresh short entries on a revisit to a broadening structure based on HVF Method highlighted in the pink box.

18 September 2019
18 September 2019

Oil's 15 year Falling Wedge and our Scenariocast

Our scenariocast was for 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.

June to September 2019
June to September 2019

CCL and PAA trades

Auxilliary trades related to oil showing weakness.

Carnival Cruise Line (CCL) is a British-American cruise operator founded in 1972 with a combined fleet of over ninety vessels across nine cruise line brands.
CCL had been forming an inverted HVF 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 on the back of reflation took the price back to the funnel but did not invalidate the setup.
Eventually CCL made it’s HVF Method-derived and pre-determined target of $30.84

Plains All-American (PAA) was on the verge of triggering showing extreme weakness. Community members who had elected to join the trade with early entries were already in the green, waiting for the official trigger of PAA’s pattern. Myself and some of the community were in at the $24.50’s with early entries shorting it to sub $3

Original long form video can be found here:
Long form Plains All American Pipeline PAA, For whom the Grandfather clock tolls CCL, WFC Update

We’ve been here before…

This is not our first time trading Carnival Cruise Lines. As highlighted in the short above, we traded CCL to the upside before calling it short.

Click the image below to see our call to trade CCL to the upside from November 2014  that saw a handsome 77% gain.

CCL November 2014 long call

3 November 2019
3 November 2019

Aramco IPO or "Citizen bag holder stuffing"

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.

 

Commentary on The Market Sniper YouTube channel how the Saudi Monarchy “patsied” their own citizens with the Aramco IPO.

Original long form videos can be found here:
Part 1:
Saudi Monarchy “Patsy’s” its own citizens on Aramco IPO – Oil & Oil services dying

Part 2:
Epilogue Aramco IPO – OIL & Services dead

19 November 2019
19 November 2019

Premium Community enters PAA and CCL shorts

Those in the Premium 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

Original long form video can be found here:
US Indices Higher on Tech Big Data Thieves, PAA, CCL, USDKRW, China A50

12 February 2020
12 February 2020

Public call on oil to single digits, Anarcapulco, 12 February 2020

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. Producer Price Index (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

8 March 2020
8 March 2020

Oil gaps down $9.50 on open

Oil gapped down on open with Brent falling more than 25% on a Russian and Saudi oil glut and 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.

Original long form video can be found here:
Oil Gaps $9.5 Dollars in Russia/Saudi Glut

8 March 2020
8 March 2020

Oil crash makes the headlines

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.

March 2020
March 2020

Oil crash target made... and more

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

13 March 2020
13 March 2020

Post oil crash - Reset season is in

The Greatest “Coincidence”
Post crash synopsis and the implications. An inverse yield curve, pandemic, the subsequent lack of demand and over-supply of oil smells somewhat of orchestration. The financial system is broken and such a set of circumstances would be a convenient excuse to reset that financial system.

We set the stage for an incoming currency crisis waiting in the wings which subsequently transpired.

Original long form video can be found here:
The Reset season is in.. Here is the real news before the news

20 March 2020
20 March 2020

PAA short closed with 30.9 RRR. TLW trade closed

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. 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

 

Original long form video can be found here:
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 £0.086

Tullows share price gapped down after the company surprised investors by slashing its production forecast and news came out of the ousting of the chief executive and exploration director.

TLW trade details:
Stop: 2.506
Entry: 1.967
Target: 0.086
RRR: 3.53

TLW (2D) target made

 

Original long form video can be found here:
Tullow Plc, TLW – Short to Single digit home & Hosed

Timeline review
Timeline review

Timeline of events leading up to crash

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

27 April 2020
27 April 2020

Is now the time to buy?

An over reaction in price action to downside usually manifests an equal and opposite reaction to the upside. But was this the right time to be buying in?

Our answer to this question was: Not yet, at this point in time there was not enough demand for oil to push the price up.

Although there was a rally from the lows, technically the chart and the environment had us take a bearish view for oil.

Original long form video can be found here:
The Great Oil ‘Rig’, Is now the time to Buy Oil – From Mr Oil Short at $64

December 2020
December 2020

What was Gold doing during the oil crash?

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 was down 86% in one year between August 2019 and August 2020!

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.

 

10 February 2021
10 February 2021

Next big call - three-digit oil?

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.

Original long form video can be found here:
Oil for 3 digits coming sooner than you Think? Energy Market Dive

1 June 2021
1 June 2021

Technical break of macro Falling Wedge for the bull case

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)

10 March 2022
10 March 2022

Epilogue - Top call after break of macro Falling Wedge

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.

Oils event timeline

2001 to 2023

Walk-through of the oil trade with Francis Hunt, The Market Sniper