$45.00 Is Driving Participation In WTI Crude Oil

Over the course of the past three trading sessions, the $45.00 level has driven two-way participation in February WTI crude oil. Buyers and sellers have slugged it out in this vicinity, creating a very compressed market. Coming into today’s session, it appeared that WTI was ready to breakout directionally. Thus far, we have witnessed more tight trading conditions near $45.00 on the last trading session of the year.

WTI Crude Oil Is In Heavy Rotation

A quick look at the daily chart for February WTI crude tells us pretty much all we need to know: trading ranges have become compressed and price is hesitant to leave the $45.00 area.

Here are the two levels to watch for the remainder of today’s session:

• Resistance(1): 38% Current Wave Retracement, $46.62
• Support(1): Swing Low, $42.36

Overview: The daily technicals show that December’s downtrend in WTI is still valid. Rejection of the 38% Current Wave Retracement ($46.62) proves this assertion, as does today’s failed auction above Friday’s high ($45.22). Unless we see institutional capital step in toward the end of the day, price is very likely to settle within 25 ticks either side of $45.00.

If you are trading WTI, be aware that this week’s inventory cycle will mirror the scheduling of last week’s Christmas break, with a late release of the API and EIA reports. However, the single largest market fundamental for the week will be the Wednesday, January 2 trading day. Liquidity providers will be back in the office off of holiday and that can bring major participation. Be on the lookout for an extra-hot WTI market on Wednesday, acting as the catalyst for a test of $50.00 or $40.00 by week’s end.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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