It has been a tight trading day for October WTI crude oil futures. Thus far we have seen a moderate 88 tick range inside of Tuesday’s extremes. The good part of consolidating ranges is that price extension late in the session is very possible.

Trade Setup

October WTI crude oil futures experienced compressional trading during this morning’s EIA news release. Since then, intraday bulls have taken control.

October WTI Crude Oil Futures-Daily Chart

The technical roadmap on the daily timeframe is fairly straightforward:

• Until proven otherwise, trade will remain between $45 and $50. A test of $45.00 has yet to come to fruition. Concerns over a supply glut in the wake of Harvey may give us this test.

• A key support area lies between $45.50 and the 78% retracement of July’s range at $45.44.

• The 38% retracement level of the current bear run falls at $46.96.

As of now, price is rotating around $46.50 on nearly 500,000 traded contracts.

The Trade: A tight scalp under Tuesday’s low should give us an opportunity to grab a few ticks on the washout of intraday longs. The round number of $45.75 will bring orders to the market, which will drive the momentum-algorithm black boxes.

A sell of $45.75 is a good entry to the test of $45.50. A reward/risk of 1:1 is a solid place to start. The key element of this trade is immediate confirmation under $45.75. If price action does not violate this level quickly after election, do not hang around and take a large draw.

For more information on similar strategies, check out this scalping tutorial. As always, trade smart and for tomorrow!