Sunday, April 3, 2016

Crude Oil Market Observations

Unfortunately, last week I missed posting my pre-analysis on Crude oil. However, heading to the next week I wrote my thoughts and observations on this market, first going through the plain charts and then through the volume profiles. It's a good idea to begin with the Commitments of Traders Report today.

Looking at this COT report, we can see that the Managed Money section were net sellers of 15,892 contracts of WTI Crude oil (NYMEX, ICE and Options, Futures combined) with selling of 13,210 contracts and a long liquidation of 2,682 contracts in the week ended March 29.

Here a screenshot for you:

The US Dollar Index is one time framing lower on the daily perspective. At the same time we are testing the macro balance area low currently. I will closely observe this lower macro balance extreme as we could see some support here. Try to study the US Dollar with Crude Oil for a better market feeling.

Ok, let's dig into Crude oil now. We start off with the plain monthly timeframe. Looking at this timeframe, we can observe that February's high got taken out. The one time framing lower behavior that occured for several months ended. So, we are currently in balanced state. However, it seems like there were some selling going on into this upside move because of the candle's reaction in March.

Looking now at the monthly volume profile, we can see that the market opened inside of the previous value close area but quickly moved lower to test the TPO single print. Guess, I mentioned this low volume area in my video analysis as possible location to fill up with volume. In my opinon we could see some rotational behavior between the two major distributions in order to fill this area with volume before the market decides its direction. It depends on the open, but I have a more bullish feeling with possible resitance at the previous VVAL close level. My bullish feeling is declared because of the unsecured high in March as a possible area to revisit.

Moving forward to the weekly timeframe, we can see a clean break lower. With this a move lower to test the marked balance area low (bracket low) is possible.

Now looking at the weekly volume profile chart, we can straight identify a poor low and a poor high as possible areas to revisit. The NPOC could be also a posible level to be cleared. Based on the previous week's close, we could see some lower prices to clear the NPOC followed by support at the same level.

In the daily timeframe we are one time framing lower. Firday leaved us with an unsecured high and a b shaped profile. Again it depends where the market will open tomorrow to conclude a better scenario. A open inside of value would be handled as rotational/bearish with resitance at VVPOC/VVAL. A break above these metnioned levels should bring the market to higher prices in my opinion.

In summary, there is quite some conflicting information here. But as said the open will bring some light into all this. Keep it simple and stay focused.