October WTI crude oil futures have broken out to the bull on heavy volumes. As I outlined last week, our heavy resistance zone of $47.46-$47.60 was a key area for this market. Once it was out of the way, the bulls dominated price action.

The timing of last week’s call on a break above resistance is a bit frustrating. The technicals gave us a good feel for the coming action, but the holiday and news cycle did not cooperate.

These types of situations illustrate the validity of technical support and resistance levels. They work well and must be respected during periods of robust market participation.

So, where do we go from here?!

October WTI Crude Oil Futures- Long Entry

Thus far, traded volumes of October WTI crude have been huge. Nearing 700,000, and another 300,000 for the November contract.

October WTI Crude Oil Futures-Daily

As you can see from the chart, the resistance zone was taken out early on in today’s electronic session. We are marching towards a test of $50.00, possibly later on today.

A few key levels to be aware of:

• Key psyche level of $50.00

• Upper Bollinger Band in the $49.50-$49.75 area (It will move as the rally continues)

• 13 Day SMA $48.23 (Again, if the market stays this hot, it will move north)

Also, do not forget that the Labor Day holiday moved the API and EIA inventory releases to Wednesday and Thursday of this week.

The Trade: Scalping 1:1 risk/reward longs from the current 38% retracement of the intraday range is a good approach to trading this uptrend. Look for compression and subsequent retracements near big round numbers.

A fantastic position trade from the 13 Day SMA may be possible later today. If so, a long entry from $48.23-$48.30 should be good for a 1:1, 1:2 or 1:3 risk/reward payout. I will be looking for a minimum of 25 ticks from this level.

As always, trade within your means and for tomorrow!