October WTI crude oil futures are rallying with a vengeance so far in the U.S. session. This market is putting on a show, a full-blown trend day up. Volumes are tremendous facing WTI futures, posting 300,000 for the October contract and 175,000 for November.

If you are trading this market, be very aware of the pending rollover and volume dilution. The roll from September to October was abrupt with heavy volatility. This one looks to be the same.

Proper risk management is an absolute must!

Technicals

The intraday charts are all trend day up to this point. As a rule, I am not a fan of selling into the teeth of a robust and directional market. If you are selling, keep it tight and those profit targets modest.

October WTI Crude Oil Futures, Daily Chart

A few observations facing this market:

• Our topside 78% resistance level at $49.43 was certainly valid. The hard break above it made this market directional.

• August’s high of $50.51 is currently being challenged with heavy volume. If it is taken out, look for heavy two-way action until either the bulls or bears win the day.?

• There is no topside resistance level for us to hang our hats on. I look for compression around every round number until institutional sellers step in.

Bottom line: I hate to be captain obvious, but the train has left the station. Buying blindly right now is not a viable trading strategy as the trade locations to the bull are terrible.

One strategy to trade this trend is to buy pullbacks from the 38% Fibonacci level of the daily range. Many traders prefer to use an Elliott Wave Strategy to fine tune the location of the retracement. I like to keep it simple and use the daily range for my retracement levels.

This is a hot market. Trade smart, and don’t let it mow you down!