Oil is Moving

It has been a curious start to the trading week for WTI crude oil. Price has oscillated in a tight daily range, between the round numbers of $68.00 and $66.50. At least for the moment, institutional players are happy to stay on the sidelines and limit all risk exposure.

Over the weekend, there was not a whole lot of geopolitical news items to shake up the oil markets. Buzz over potential U.S. sanctions on Saudi Arabia has died down in the aftermath of journalist Jamal Khashoggi’s disappearance. For the moment, building supply and lagging seasonal demand for oil refinements appear to be bringing the energy bears out of hibernation.

WTI Crude Oil: Technical Outlook

One look at the daily chart for December WTI crude oil tells the tale ― the trend is down and intact. From an exclusively technical standpoint, one is best advised to maintain a bearish bias.

December WTI Crude Oil Futures (CL), Daily Chart
December WTI Crude Oil Futures (CL), Daily Chart

For the week, there are a few numbers that will be of significance. Here they are:

  • Resistance(1): Bollinger MP, $69.83
  • Resistance(2): 38% Current Wave Retracement, $69.93
  • Support(1): Swing Low, $65.74

Bottom Line: Until proven otherwise, the daily downtrend must be respected in December WTI crude oil. Sells from the 38% Current Wave Retracement ($69.93) are premium short entries. As long as the Swing Low ($65.74) is valid, I will have sells queued up from $69.89. Using a tight 1:1 risk vs reward management plan, this trade is good for a fast 16 ticks with an initial stop at $70.05.

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