Chapter 48  WTI: The Stage of Emotional Digestion, Oil Prices Fluctuate at High(7.26)


During the Asian session on Wednesday (July 26), WTI crude oil fluctuated in a narrow range, currently trading around $79.3 / barrel. The surge in the oil price yesterday was mainly due to signs of tightening supply and positive economic signals from the Politburo meeting in China, which emphasized the focus on stimulating domestic demand, boosting the market's confidence in the recovery of China's oil demand. However, Eurozone surveys showed that the decline in corporate activity in July was larger than expected, which also limited oil price gains. It has been some time since the sentiment trading of tight supply has passed, and US crude oil has risen for a month. Oil prices have risen from 67 to around the current 80, coming to the area of dense resistance. The upward movement of prices may need greater stimulation.

Investors need to pay attention to the total number of new home sales and EIA crude oil inventories data for June today, with the focus on the Fed's interest rate decision in the early morning.

Technical Analysis

Trading at the daily timeframe, all moving averages were still running upward and the MACD indicator was also a wide golden cross. As the price has formed 4 consecutive rises, the bullish trend is obvious. However, the momentum of oil prices at a high level has slowed down at present, and a small Doji star has appeared. Therefore, the possibility of a correction still exists. Yesterday, US crude oil first fluctuated at the high, and then rose again after a short-term pullback to the 78.2 line in late trading, testing the 79.8 line of resistance at the high. Finally, the daily chart closed with another white body. The market's sentiment to follow the rally has obviously increased. However, as the oil price rise constantly, the momentum of the short-term rally has also weakened. During the day, traders should focus on the oscillation above the US oil price around the 80 line. The short-term resistance at this level is expected to be strong, and the price may retrace, but the space will not be large. Besides, traders should also pay attention to the fluctuation around the 78 line below. If the price recovers again after the moderate digestion of the volatility, it will be expected to test highs in the range of 82 to 83 which were heavily traded earlier.

The main idea of intraday US oil trading is to maintain the expectation of bullish oscillation, but investors can try moderately to buy low and sell high in the short term. When the oil price rises to 79.8 during the day, aggressive investors can consider trading a small position for short-term short. The stop loss is set at 80.2, and the target to take profit is around 78.8, where you can reduce the position first and move your stop loss to break even. The remaining positions can then see the 78. When oil prices below retrace to around 78 again during the day, aggressive investors can take another small position to go long in the short term. The stop loss is set at 77.6, and the target to take profit is around 79.3, where you can also reduce the position first and move your stop loss to break even.

WTI: The Stage of Emotional Digestion, Oil Prices Fluctuate at High(7.26)-Pic no.1

Trading Recommendations

Trading Direction: Short

Entry Price: 79.800

Target Price: 78.000

Stop Loss: 80.200

Support: 78.800/77.500

Resistance: 79.800/82.500

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