CL trading day Sept 1 2017

posted in: Market Recap 0

Crude opened right at the afternoon pull back low level from yesterday.

INVENTORIES

  • Overnight was short but we saw short covering rally before the open putting the net inventory slightly short.
  • Short term was long from yesterday. Remember what I said yesterday that was created by weak hands.

INITIAL LEVELS TO WATCH

  • 47.67┬á 4-day balance high
  • 47.20 yesterday’s prominent POC
  • 46.91 yesterday’s pullback low
  • 46.63 Overnight low

At the open the market went up so the first pressure was on overnight slight short inventory. Trading below yesterday’s POC was telling me that the longs from yesterday were probably not very comfortable though. Just put you in their heads for a second. They bought yesterday’s high and the market overnight traded lower putting their inventory at risk. If the market trades back up to their level would you buy more or just get flat and thanks the market to give the opportunity to turn a loser into a flat trade. I think the most probable behavior would be to get flat adding selling pressure.

The down move in B and C period was related to correcting this inventory. Notice that selling at the previous settlement ( high in A period ) was considered as weak selling though. Something that we have to keep in mind. The most difficult situation as a trader I think is when the market starts a tone and after correcting the inventory reverses back. That’s what happened today. We left a buying tail at the bottom which is sign of a good low. We traded above the pit session weak high before consolidating for the rest of the day.

That was not an easy market to trade today as it was all inventories related. Correcting overnight inventory first and short term inventory second, then the market became too short again, then too long again. In all this though the one time framing up that started in C period stayed intact until the close.