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Tuesday, September 17, 2019

An Intraday Look At WTI Crude Oil Futures

Further to my post of September 14 regarding the attack on Saudi Arabia's oil refineries and possible effects on the price of WTI Crude Oil (CL) and Brent Crude Oil (LCO), I'd present this analysis of CL on a short-term intraday basis.

As you can see on the following 60 min chart of CL, price gapped up when it opened on Sunday and has been trading in a large volatile trading range since then. I had identified 60.00 as a major resistance level, and price has been, largely, trading above it since then, with a few dips below. It closed below that level on Tuesday.

The Balance of Power has shifted from buyers to sellers since the gap and is now at an extreme low level, from which, price has, typically, launched higher after previous drops during the past several months.

Shown on the next 60 min chart of CL are today's (Tuesday) and tomorrow's price Pivot Points and their respective intraday support and resistance levels.

Here are Wednesday's price levels:
  • R3 = 68.21
  • R2 = 64.08
  • R1 = 61.45
  • PP = 59.95
  • S1 = 57.32
  • S2 = 55.82
  • S3 = 51.69
Note that PP lines up with 60.00 major resistance, which traders will need to retake and hold if others are going to be convinced that sentiment has shifted back to the buyers.

I've also shown the monthly VWAP (volume weighted average price) on this chart (broken gold line). At the moment, it's in line with S1 and the 200 period MA (pink), so CL may briefly dip lower to that level before it, potentially, retests its upside breakout highs and beyond.

Also, the RSI indicator is presently oversold on this timeframe, hinting that a turnaround may be imminent.

The following daily WTIC:OVX ratio chart shows that price dropped on Tuesday to near-term support around 1.25. As well, a bearish moving average Death Cross has just reformed on this timeframe, suggesting a lower oil price may be imminent.

However, this may prove to be a "bear trap" for traders who position themselves on the short side of CL, in the near term.

To assist in gauging whether this is a trap, and potential price reversal points, keep an eye on:
  • the RSI on the daily timeframe for a flip back up towards 50.00
  • a reversal upwards and eventual bullish crossovers of the MACD and PMO indicators on the daily timeframe
  • a reversal of the bearish moving average Death Cross to a bullish Golden Cross on the daily timeframe
  • a reversal in the Balance of Power from sellers to buyers on the 60 min timeframe
  • price action around the Pivot Point levels, and, in particular, S1 and PP, together with VWAP and 200 MA, on the 60 min timeframe
  • the RSI on the 60 min timeframe for a flip back up towards 50.00

As an aside, Bloomberg is reporting the following...

Source: Bloomberg.com

In closing, I'd mention that it's not just about oil supply.

Now, it's, also, about the perception of increased vulnerability to more attacks, not only on oil facilities, but, also, other national and international security infrastructure, that will affect global markets and economies over the coming weeks and months, as well as any military escalations, as a result...and how longer-term players position themselves, as a result. Whether or not GOLD factors into their portfolios remains to be seen, about which, I've written in my post of September 17.

One thing is certain...heightened market volatility in both directions is here to stay for awhile.