In my previous update on crude oil, I recommend opening a sell position with 20 pips stop. Oil prices fell nearly 165 pips but unfortunately only after closing our position at the stop. But, thankfully, our gold position compensated the stop.

At this moment, the black crack is trading at $45.82, below the 50 periods EMA which is providing a resistance at $46.26. At the same time, we can see the Stochastic which is holding at 13. Stochastic below 20 signifies an oversold scenario which means the sellers are likely to take profits and buyers are likely to enter the market soon. Having said that we can expect a slight retracement in the energy instrument.

WTI Crude Oil – 4 – Hours Chart – Oversold 

Fundamentally, investor sentiment for oil is getting more bullish after the EIA reports are showing consecutive draws in the inventory figures. The economic figures from the United States, the world's largest oil consumer, are getting better and increasing investor sentiment over oil demand.  

WTI Crude Oil Trading Plan

I opened a buy signal at $45.80 with a stop loss below $45.5 and a take profit of $46.15. It's important to keep in mind that the economic events from the Eurozone can also impact the trading signal. So, make sure to book partial profits as soon as the oil crosses above $46.