Currently I do not trade Crude oil but I thought a smart market update would be great. Maybe the first thing to note is that the volume of the April contract catching up and the Open Interest is already higher at the April contract.

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This market update will go through the pure technical top down analysis of the plain higher time frame charts and does not consider any news based influences which occur or have occurred. Secondly, the historical charts are back adjusted, I am not quite sure but I think it is. Thirdly, do not consider this as advice, this are only my observations what I currently see in the market. That in mind, let’s start off with the monthly perspective. Looking at this timeframe, we can quickly observe a balanced market behavior and identify January as an inside month at the same time. The market seem to briefly dipped into the previous low from January but could not find any continuation of selling. With this, we could conclude a possibility of a move to the other side of balance which would be the high of January if this month would close without change. Next thing we can observe is the liquidity area which could bring the market down to the next possible area. Anyway, I guess we can all agree that the market is balanced.

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Now let’s dig deeper into the charts with the weekly perspective which reveals quite some craziness. Balanced like a monkey on a ball with huge buying tails. The high/low from the inside week back from January got taken out and currently, it seems to test some lower prices again. The only thing is the liquidity in which the market moved to conclude a potential downside “cycle”.

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Moving forward to the daily timeframe, we can see the explanation of today’s selling occurrence. The market could not break the balance area high after a three-day buying behavior again. Also, the market broke the previous day’s low and the one-time-framing higher behavior which occurred only for two days.

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With all that in mind the only valuable trade for today was a level around .70 with a stop above the .90 but that occurred at 6.00am. I would be still quite bearish about this market but can’t identify a great level to trade at this moment. Let’s see how the market will develop something for us tomorrow.

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Last but not least let’s take a look at COT report from Friday. Only to figure out what the managed money sector is doing currently. Looking at the report we can see that Money Managers were net selling 23,397 contracts of WTI Crude oil with some long liquidation and fresh new selling in the week ended February 7. We can see an increase in short positions and a decrease in long positions and net positions. First indication of a possible sell-off in this balanced environment?

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