We have all wished at some point to see the future; to know what will happen next. Who will win the World Series? What will be the next technological leap? For traders how will the market trend? Without delving into the world of theoretical physics or metaphysics, there is not presently a way to see into the future. What we do have, is a look into the past. Though history does not directly reveal what is to come it is the infrastructure in which our future is built. It deserves our attention.
I know that my niece will learn to ride her bike, because most little girls in Gilbert, Arizona have learned to ride their bikes for the past few decades. Is Selah’s biking future guaranteed? No, but chances are she will ride to the park with me on my next visit. Selah and her bike may be an over simplification but the concept is foundational. There is a trend, a president set that can give me glimpse into the future. Identifying trends in the market, though more abstract, can be just as simple.
Today’s chart of the day takes a five year look at Crude Oil. Horizontal lines highlight the 10,5,3 and 1 year high’s and low’s to give relative insight into support and resistance. What insights can you draw from this bird’s eye view? I can see that for 3 out of 5 years the CL ended higher than it started. I can see that the average high, low range for the past 5 years has been 81.25. I can see that 2008 is the outlier, the little girl that maybe didn’t learn to ride a bike. Without 2009 the average high, low range is 36.71. I used NinjaTrader with Kinetick’s Free End of Day Data to overlap year, month and week charts with drawing tools to highlight the support and resistance in 5 minutes for 5 years of insight into Crude Oil. What trends do you see and what trends would become clearer when compared to fundamentals like election years and other current events?