WTI Crude Oil: Beware Of Rollover!
Shain Vernier • 1 min read
Watch out for rollover! For all WTI crude oil futures traders, rollover is a dangerous time to trade. A dilution of volume between contracts can cause strange price action. This reduces the effectiveness of technicals.
Also, producers and speculators are bringing the spread in. The result is often strange pricing and unpredictable sweeps.
As of this writing, October WTI crude is the dominate contract over September trading at a near 3/1 clip. September crude gave us some great trades marked by heavy participation. I have a feeling that October will be much the same.
For Today’s U.S. Session
For the rest of today’s session, I am taking a cautious approach. Thursday’s late day short turned out to be ill-fated, likely a result of lagging participation.
October WTI Crude Oil-Daily Chart
A few technicals for October crude:
38% retracement of the current wave on the daily is $48.04
Test above last session's high of $47.35
Bollinger Band Midpoint/SMA crossover present
Resistance at last session’s low of $46.62
The technicals for October WTI crude oil are strongly bearish. Currently, we are seeing compression around $47.00.
Bottom line: Rollover is a difficult time to be in the market. Many professional traders will not trade during rollover because of the crazy price action and unpredictability. This particular roll has come fast and hard towards the October contract.
For me, today is a no-fly zone. If you must trade, keep the stops tight and remember that better opportunities are right around the corner.