Yesterday I entered the 5th XOM trade since starting a core short there and the 4th since a counter trend bounce started in late August.
I like the XOM November $85 Call position entered yesterday a lot still, I also mentioned ERX for those who preferred sticking with equities/ERFs, but still getting some leverage on the position.
I think XOM and ERX are still in a reasonable area for a long position, although yesterday was the better day for XOM calls as the momentum was on our side to discount the premium of the calls.
I fully intend on re-entering the XPM core short, just not yet. This would be the second counter trend long since late August.
The long term view on a 5-day chart of XOM shows a bearish "Ascending Wedge", these have changed their behavior significantly over the last 3-4 years and act nothing like what Technical traders expect, however are still very easy to trade.
Technical traders expect price to break below support as the price pattern's support and resistance trendlines converge in to an apex. From there the rule of thumb is, "Wedges retrace their base", meaning somewhere around the green dashed trendline.
However we have seen time and time again this decades old price pattern (really closer to a century) pull an initial head fake like the move below support, then another Crazy Ivan head fake above the apex before actually breaking to the downside and reaching the same target zone, usually as a minimum target. Think about how each of those head fakes primes the next move and how they can be used tactically and strategically by smart money, to understand this you must understand Technical Analysis' culture which states that, "If a price pattern doesn't do what it is 'suppossed' to, then reverse your trade in the opposite direction".
The yellow arrows are a more likely path for XOM.
This daily chart shows where XOM "Was" a core short position, around the end of August it was covered, profits taken and a counter trend bounce long was opened and finally closed at a profit.
It looks like we'll get another counter trend move higher from here, which would help that 5-day chart see a price break above the apex of the wedge.
Yesterday I entered a new XOM Call position and mentioned ERX as an alternative play in equities/ETFs.
This closer daily view shows the initial cover area for the core short late August and the initial long trade, now price has broken below support, formed a bullish reversal Doji candle yesterday on increasing volume and is still in decent position for new longs.
The 15 min chart shows the initial core short negative divegrence in July, the BTC in August and counter trend long position and the new positive divegrence for what looks like a new counter trend move, I expect it to make a higher high.
The 10 min chart has a leading positive now as well
Here's a closer look
And the 15 min chart is leading positive too,
this is enough of a divegrence for a counter trend move to the upside.
We even have a 30 min leading positive divegrence in XOM.
ERX should work as well (3x Long Energy ETF)
ERX 60 min shows the ultimate probability of longer term direction and that is for the initial downtrend to resume at some point, but...
For now, ERX, like XOM also has a leading positive on the 10 min. chart
The 15 min chart after a quick stop run and a daily Doji reversal candle yesterday
And like XOM, the 30min is positive too.
This looks like the last decent area to enter these positions.
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