A Gap In The WTI Crude Oil – How To Trade? - Forex News by FX Leaders

A Gap In The WTI Crude Oil – How To Trade?

Posted Thursday, April 20, 2017 by
Arslan Butt • 1 min read

Yesterday, we saw some heavy losses in the WTI crude oil. This was due to the EIA crude oil inventory data which recorded a drop in inventory of 1.0 million barrels over the previous week. The drop in inventory was lower than the expected figure of 1.2 million/ barrels.

You must be wondering why crude oil prices dived more than 200 pips, while the fall in inventories indicates an increase in the demand for Crude Oil which ultimately should lead to a price increase.

Priced In – Crude Oil

The investors increased their bets on crude oil due to expected inventory figures which suggesed a draw of 1.2 million barrels. The actual draw was 1.0 million barrels making the actual figure lower than the expectation. That's why we have seen sudden selling en masse.

Crude Oil - Hourly ChartCrude Oil – Hourly Chart

How To Trade The Gap?

This morning, the crude oil opened with a huge gap of around 36 pip. Yesterday it closed at $50.62 but today it opened at $50.98. The gaps caused by volatility are meant to be filled in the same day or in upcoming days.

Technically, the black gold has completed 50% retracement in the $51.32 and also holds below 50 periods EMA resistance along with the RSI. Hence, the indicators are suggesting a sell signal making it time to call for a selling entry.

Forex Trading Signal

Investors are recommended to take up a sell position below $51.30 with a stop loss above 51.45 whereas the take profit should be placed at $50.60.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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