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MichelGJulien

The $104 Level on WTI Crude Constitutes the Line in the Sand

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Although we are still in a downtrend on the 4hr chart, the importance of the $104 level has been demonstrated again today. This should be a little bit comforting for the bulls in my opinion. We even have what looks like a triple bottom on the 4hr. So, it seems like there are lots of buyers at that level which would explain why $104 has been VERY resilient so far. In fact, this market has been consolidating since last Thursday between 103.85 and 105.50. From a technical point of view, trading that range until it's broken seems to be the way to go for now. Should we break below $104 then we'd have a $2 black hole, maybe more. To the upside, we need to clear 105.87 to regain some bullish momentum.

 

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Now, from a market profile point of view, the market opened this morning within Friday's range but outside of the value area. Prior to that it had already covered a lot of ground going from 103.87 to 105.37 (for a $1.50 run) during the latter part of the overnight session. The initial balance of 109 ticks this morning (40% above its 10-day average) implied that volatility was high and therefore caution was advised. Traders did try after that to bring the price down towards Friday's session low at 103.90 but ran out of fuel. The rest of the session was pretty much filled with two-sided action and we finally ended the afternoon almost unchanged from Friday's close. I only took one trade today:

 

1. Short 104.92 at 9:33, exit 104.72 at 9:41 for a +20 ticks profit. Result: +20 ticks today

 

For tomorrow, what should worry bears is that we keep making poor lows since last Thursday. Generally, it is a bullish sign if it persists. We'll see.

 

More articles on my blog

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