Despite the dramatic draws in crude oil stockpiles, the WTI failed to come out of the consolidation pattern $48.75 – $49.85. This is due to two factors.
EIA Inventories Are Out
Energy Information Administration (EIA) reported an inventory draw of 6.45 million barrels for the previous week followed by a draw of 1.5 million barrels. The drop was very surprising and still, the crude oil failed to place new highs. The oil is trading with a bullish bias and seems to be waiting for the technical breakouts.
Technical Outlook
Oil has formed a sideways pattern on the 4-Hour time frame, which now seems to give us an upward breakout at $49.90. In this case, oil would make an upward move until $50.35 & 50.75 on breakage of $49.90.
Crude Oil – 2-Hour Chart – Bearish Trendline
Crude Oil – 2-Hour Chart – Bearish TrendlineIn addition to this, the Crude Oil is trading above the 50- periods EMA with a support at $49.20. Stochastic is trading at 85, keeping an upward momentum, but it's already in the overbought region. This makes it too risky for us to buy here.
Crude Oil Trading Plan
I'm eyeing $50.30 for a sell position with a stop loss above $50.50 and take profit at $49.50. Let's see how it responds to the US economic events during the New York session today.
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