The chart below shows 15-minute candlesticks on crude oil futures since last Thursday, and at the time of this writing, crude is trading at $45.90.  Last Thursday’s and Friday’s low is noted by the shaded box at the bottom of the chart, and this week’s high is highlighted by the red price level. The 50% retracement of this move is $45.95, which is the pivot that we are using today to establish a bias.

While price is above the pivot, we are expecting crude futures to target the upper trend line at $46.50.  We think that this is a good level to establish an intraday bearish position as well. If $46.50 does not hold as resistance, then the next target would be the high of the week coming in at $46.71.

On the downside, if the pivot serves as resistance, then the first lower target will be the bottom trend line coming in just below the $45.70 price. We don’t anticipate much support at this lower trend line other than what could be a scalp long position. Below that level, we would target Tuesday’s low of $45.56 shown by the green price line, which we believe doesn’t offer much support, followed by the grey shaded area from Thursday and Friday’s low as the third target.

If crude oil futures reach this third target area, we believe that the risk to reward is much better for establishing a bullish position either on an intraday or daily basis, but with a weekly time-frame in mind as well.

Traders should be aware of two items on today’s calendar and consider limiting risk ahead of these announcements. The first is the crude inventories which will be released at 10:30 EST, and the second is the FOMC statement at 2:00 p.m. EST followed by the 2:30 p.m. press conference.

 

Note: Exchange fees not included in calculations.

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