Bear Market Trader | Daily take on WTI crude oil
My daily take on the WTI crude oil market.
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Daily take on WTI crude oil

Daily take on WTI crude oil


This is my dai­ly take on the WTI crude oil mar­ket. I will keep these post short and to the point. The pur­pose of these posts is for me to set up my bias for the day and look for sig­nals to start tak­ing positions. 


Sources will be list­ed at the end.




Click here for my dis­claimer. It basi­cal­ly says that I am on my path to becom­ing a trad­er and these are just my opin­ions on how to approach learn­ing to trade. Feel free to check it out and com­ment on it.


Here it goes…


WTI has pos­i­tive and neg­a­tive cor­re­la­tions to oth­er finan­cial instru­ments and I will list these here to show the rea­son for my bias. I have three cat­e­gories: Down­ward, neu­tral and upward pres­sure. Down­ward pres­sure means that the items list­ed have a neg­a­tive effect on WTI crude oil and is cause for a short-bias and vice ver­sa. Under these I will list the items I think cre­ate a bias in that direction. 


Upward Pressure


The com­modi­ties that have a pos­i­tive cor­re­la­tion with crude oil are most­ly look­ing green. Although WTI is one of them, so only have is green and half red. But because of the green nod of the WTI I am going to put this under upward pres­sure. WTI shows open at 51.92 with a high of 52.16 and a low of 51.92. A change of 0.24 dollars. 

These have a neg­a­tive cor­re­la­tion on WTI so this looks like it’s press­ing upwards as well. Yes­ter­day these had pos­i­tive num­bers but that changed overnight. 


News — Crude oil prices gained in Asia on Wednes­day as indus­try esti­mates of U.S. inven­to­ries showed a large that expect­ed drop in crude, though prod­ucts showed gains over expect­ed declines.

Crude oil inven­to­ries fell by 7.130 mil­lion bar­rels, the Amer­i­can Petro­le­um Insti­tute (API) said oin Tues­day, more than expect­ed as gaso­line stocks rose by 1.94 mil­lion bar­rels and dis­til­lates gained 1.64 mil­lion bar­rels miss­ing expec­ta­tions of declines.

Overnight, crude oil prices set­tled flat on Tues­day as expec­ta­tions of a ramp up in U.S. pro­duc­tion weighed on sen­ti­ment while eas­ing con­flict in North­ern Iraq between Iraqi and Kur­dish forces less­ened con­cerns over poten­tial sup­ply dis­rup­tions in the region.

Crude oil prices came under pres­sure on renewed over­sup­ply con­cerns fol­low­ing data indi­cat­ing that U.S. pro­duc­ers will increase output.

The recent uptick in crude prices above $50 a bar­rel is wide­ly viewed as an incen­tive for shale pro­duc­ers as it’s the price lev­el at which they can ramp up output.

Traders said that prices were pushed up by a drop in U.S. crude inven­to­ries as well as con­cerns that fight­ing in Iraq and mount­ing ten­sions between the Unit­ed States and Iran could affect supplies.


Technical Analysis



On the 4‑hourly chart we can see that prices have been mov­ing above and below the first Fibonac­ci chan­nel line. Even though momen­tum seems to have lost a bit we can’t real­ly know if prices will move up or down. What I do think we can know is that a break of ‘for­ma­tion’ is going to hap­pen soon. Either between the Fib. chan­nel line and the orange resis­tance line or on the down­side. Mean­ing that same Fib. chan­nel will func­tion as the resis­tance trend line and the low­er orange trend line as the sup­port line. Let’s see what happens.



On the 30-minute chart we can see a bit bet­ter that at this moment prices have reached the resis­tance trend­line and are most like­ly to go down. How­ev­er, at this moment it is a ‘low volatil­i­ty time’ it might just ‘cruise’ right through. We’ll have to wait and see. 



On the 5‑minute chart we can see what I meant about the low volatil­i­ty a bit bet­ter. There’s not much action going on that builds the momen­tum for those pres­sure points I explained ear­li­er in pre­vi­ous points. If you’d like to know what these are please feel free to leave a com­ment or con­tact me direct­ly. I’d be hap­py to share with you the find­ings of my learn­ing so far. 




So I would say that I am still more inclined to short because we have returned to ear­li­er highs. At these highs I said prices would go down. I am won­der­ing if all that is hap­pen­ing in Iraq and Iran is enough to cre­ate momen­tum for prices to shoot through the dai­ly chart resis­tance trend line that is still in a down­ward trend. This might be the point where we will see this line break and wel­come in a bull­ish era. If we break this cur­rent for­ma­tion to the down­side we can prob­a­bly see prices go down to 50.20 again. If we break to the upside we can see prices go to 55 dol­lars a bar­rel. Anoth­er big fac­tor is going to be the release of the EIA report lat­er on today. Let’s have a look at some entry and exit setups. 


Entry and Exit



If we break the 52.20 lev­el I’d say we’re look­ing at a down­side move. Espe­cial­ly after break­ing 52.05. So for a move to the down­side I’ll be look­ing to short from those points on. If we break to the upside I’ll be look­ing to go long at 52.41 and my tar­get will be at least to 52.60. I think there will be a big­ger move since it is a crit­i­cal break in my opin­ion. The fun­da­men­tals sure­ly sup­port a move to the upside but we’ll have to wait and see. Excit­ing to see what will hap­pen today.


Thank you

Thank you as always for being a part of my jour­ney into becom­ing a trad­er. Please feel free to com­ment or ask ques­tions. Let me know what you think. 





Day trader. Tech geek. Sim Racing Enthusiast.

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