November WTI crude oil futures are trading near a convergence of key support levels. If the bearish action of Monday’s session is to continue, then we are likely to get long trade from an optimal level.

Be sure to remember this week’s inventory cycle is on the horizon:

• API crude oil stocks are today at 4:30 PM EST.

• EIA crude oil inventories are released tomorrow at 10:30 AM EST.

Technical Outlook

Yesterday brought heavy selling facing the November WTI futures contract, ending in a drop of over one dollar per barrel.

November WTI Crude Oil Futures, Daily Chart

Today’s U.S. session has crude in limbo, trading around Monday’s close of $50.57. Price has stayed within a tight 51 tick intraday range thus far, all but ensuring extension later in the session. Below are a few key support levels to be aware of:

• 20 Day EMA at $50.44

• Bollinger MP at $50.19

• Psychological level of $50.00

• Daily SMA of $49.56

• 62% of September’s range at $49.48

Overview: It remains to be seen whether or not price continues to trade to the bear. Currently, WTI crude pricing is directly above a considerable support zone. In the event that price trades below Monday’s low of $50.07, then we are likely to test the Daily SMA.

Bottom Line: I will not be surprised if we see a rotational market today after Monday’s selloff. However, a buy from the Daily SMA of $49.56 gives a premium location to play a late-session rotation back towards $50.00.

Buy orders from $49.56 can be a great scalps or position trades for the day. The 62% level at $49.48 is likely to lend considerable support to entry. So, a trading plan based on 1:1 R/R scalps for small points or a larger position trade from this level are both possibilities.

An initial stop under $49.25 will be necessary to take the longer-term position trade for a 1:1 or 1:2 R/R in this market.

As always, trade smart and for tomorrow!