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WTI Crude Oil: Counter Trend Trading Plan

Posted Tuesday, November 7, 2017 by
Shain Vernier • 2 min read

December WTI crude oil futures are posting another big week and nearing a few topside resistance levels that are worthy of note. For the session, WTI crude is near flat. Heavy volumes have defined the December WTI contract, already trading over 450,000 lots for the session.

Today’s closing range will shed some light on where price is likely to end up for the week. Be aware of the coming inventory cycle, with the API release later on in the session and the EIA report that comes out tomorrow.


WTI Crude Oil Technicals

The proximity of price to both the yearly high and key Fibonacci level has given traders reason to pause. For the moment, December WTI futures have traded a tight 80 tick range. Again, I will refer to the weekly chart to illustrate a few trading scenarios.

WTI CrudeDecember WTI Crude Oil Futures, Weekly Chart


It is a foregone conclusion that our range will extend as the session wears on. The trading DOM is on fire right now, an indication of the degree of conflict in this market.

There are two key levels that I am looking at to the topside, the yearly high at $58.44 and the 38% macro retracement level at $57.79.


Trading Plan: This is an active market in full bull mode. Holding position shorts is risky, and premium trade locations to the long have been taken. I will be employing a tight scalping strategy from topside resistance levels:

  • Shorts from $57.74, stop above $57.85 for a 1:1 R/R trade producing 11 ticks.

  • Shorts from $57.79, stop above $58.00 for a 1:1 R/R trade producing 12 ticks.

You will notice that the entries and stops overlap. Given the tight take profits, the short from $57.74 has a good chance of initially going positive, bringing many management options into play allowing for a separate trade involving the $57.79 level.

Be sure to have an idea of an acceptable profit, loss, and leverage before getting in. These elements should be included in your customized risk management plan.

As always, trade smart and for tomorrow!

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