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MichelGJulien

Is WTI Crude Shifting from Bearish Back to Bullish?

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It might be a little bit premature to commit to an official position on that question, but bulls definitely were back in the market at full strength today. They even pushed hard enough to the upside to invalidate the downward channel that had been firmly in place since July 19th. So, is this just a temporary situation or rather the continuation of the former uptrend started June 24th? In my opinion we will probably have to wait until 105.35 is broken convincingly to the upside before confirming that indeed the bulls are back in charge. In the meantime, it is still a "sell the rallies" type of market (but now with extra caution I'd say).

 

This morning, just before the pit session started, it looked like we were in for a difficult (or at least risky) trading day. We had on deck the DOE inventories data publication, the FOMC meeting and the usual end-of-the-month traders' behavior. Thus, caution seemed to be more than advised. The market opened at 103.41 within yesterday's range and value area. We had 2 gaps begging to get filled today. Yesterday's gap down at 103.09 and Monday's gap up at 104.58. Incidentally, both of them got filled today which is a relatively rare occurrence. Just prior to the release of the DOE numbers at 10:30, I tweeted: "Looks to me that traders are expecting inventories numbers that could be bearish for WTI. If it's not the case, this is going to pop". And popped it did. Visibly, the numbers weren't bad enough.

 

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After a slight setback, bulls could regain some ground

 

At one point, we went to as high as 105.08 before the close of the pit (with a little help from the FOMC's gibberish also I must add). So, the bulls have flexed their muscles today and are almost back in the driver's seat. Looking to get short anyway? In my opinion 105.35 would be the low-risk level to enter short, but with a super tight stop in case things get out of hands quickly. I took 3 trades today:

 

1. Short 103.30 at 9:18, exit 103.30 at 9:34 for a breakeven trade.

2. Short 103.30 at 9:50, exit 103.20 at 9:56 for a +10 ticks profit.

3. Long 104.34 at 11:56, exit 104.55 at 12:24 for a +21 ticks profit. Results: +31 ticks today, +439 ticks this month.

 

More articles on my blog

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We could say it is getting Bullish, Libya's oil exports are one of the worst in decades which may overall have an impact for the demand of crude oil on a Global basis...

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