WTI Crude Oil: Intraday Scalping Setup

The last week has been a roller coaster for WTI crude oil. Hurricanes Harvey and Irma have caused extensive damage to the Gulf Coast region while bringing high degrees of participation to the oil markets. So far today, we are seeing heavy volumes on October WTI crude oil futures, with over 250,000 contracts traded early on in the U.S. session.

Robust participation provides optimal conditions to execute a scalping strategy. In order to trade efficiently while implementing a scalping methodology, we need maximum liquidity. It looks as though we will have that today.

Technicals

The road map for October WTI crude is straightforward. Currently, the market is trading sideways inside of last Friday’s range.

October WTI Crude Oil Futures, Daily Chart

A few technical levels and aspects of this market:

• Bollinger Band/SMA crossover lends a slight bullish bias

• Trade is tightening between the 13 Day SMA and 78% of August’s range

• The big round numbers of $50.00 and $45.00 are the macro trading range

• Bollinger Band Mid Point (MP) at $47.84

• 13 Day SMA at $47.35

• 20 Day EMA at $47.91-$48.00 (this indicator is sensitive and updates frequently)

Thus far we have seen a test of the Bollinger MP at $47.84 and 20 Day EMA at $47.91. This area represents a considerable support level and must be respected. If price washes out the current intraday low at $47.73, then a test of the SMA is likely.

The Trade:  The beauty of the scalping methodology is that one does not need to be correct about the larger direction of the market to profit. The 13 Day SMA is a great place to scalp longs for today’s U.S. session. Buys at $47.35-39 looking for a max profit of 10-15 ticks are high probability trades. A tight 1:1 reward/risk is solid risk management for this type of trade.