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Fundamentals

During Tuesday's (November 7th) Asian session, WTI crude oil oscillated narrowly, and it is currently trading at 80.3 dollars/bbl. Yesterday, WTI was too weak to rebound, but at least the decline eased, closing the daily chart slightly lower. It opened lower today due to a technical extension of decline, and the bears/bulls are balanced.  The oil price was limited to trade yesterday with many investors trying to wait and see. It is possible that yesterday's session was an opportunity for many investors, but not the session we are looking for. It's like when you weave a big net with a 2-finger-sized mesh, then you are destined to just let go of the small fish that are below 2 fingers. Therefore, when choosing a trading system, you must give up a lot of seemingly opportunities, because those opportunities are not what you want. For sure you may earn something from it, but this is a systematic earning, and random gains will only weaken your execution and destroy your trading circle. At present, the trend shows that neither the short nor long overwhelms the other, and short sellers are still trading the slowdown demand in the major economies under the downward pressure of the economy. In the short term, the bears dominate more, but I still maintain the plan to go long at lows for the following reasons. Firstly, the U.S. plans to buy up to 3 million barrels of crude oil next January to supplement the SPR, while the current price is in the acceptable range of the United States. Thus, the downward space will be small. Secondly, the war is still ongoing. Although it is cooling, there is the possibility of large-scale outbreaks at any time, and the oil price is even possible to surge to 100 once the oil-producing countries participate. Lastly, the OPEC+'s production cuts are valid. It did not end earlier than others expected, and the oil price has been reduced from $94 to $80. For me, the retracement is sufficient, even on November 6th, Saudi Arabia and Russia reaffirmed additional production cuts of 1.3 million barrels to the end of December, and it won't affect much the output. Instead, this reaffirmation is a psychological factor to maintain the stability of the oil price. In addition, it reminds the bears that the price will be stable soon, and we are still cutting production.

Today's Focus: API crude oil inventory data, the Eurozone PPI, and the U.S. trade account for September. More importantly, the speech by Fed Chairman Powell and several Fed officials later.

Technical Analysis

Oil oscillated narrowly yesterday from 80.5 to 82. It showed a big oscillating range, while the trading space was limited. Besides, the daily chart closed with a doji star and a long-upper-shadow, indicating balanced bulls and bears. According to the hourly chart, the MACD bearish momentum is releasing, and there aren’t any signals for a reversal in the Candlestick chart. Nevertheless, the depreciation in the hourly chart will be small as WTI approaches the Bollinger lower bands. If WTI reaches the Bollinger lower bands, it will be a good chance to go long. Comparingly, falling from highs suggests strong upper resistance, and investors should not expect too much shortly. At the same time, the upper space will be opened when the hourly chart reverses.

Today's trading recommendations: Buy at lows. If WTI retraced back to 80.0, try to go long with small positions and set the stop-loss at 79.5. To take profits, the first target will be at 82.5, where investors can reduce the position size and move the stop-loss to breakeven, and put the second target at 83.5. If WTI plummets to 80.0 again, investors should not follow today unless a sign of stopping depreciation after a plunge emerges.

Trading Recommendations

Trading direction: Long

Entry price: 80.000

Target price: 82.500

Stop loss: 79.500

Support: 80.000/77.800

Resistance: 81.500/83.500