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WTI Crude analysis on this EIA news day

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Well there is dollar strength, weakness in the broad market and an overnight fall in WTI Crude prices combined with the EIA inventory news shifting a day into Thurday. All this has the making of a very volatile day with WTI Crude, so what is the safest way to trade this on a day like this. There is an aggressive short extension that has already dipped into it's .618% Fib retracement. If you have the courage to trade there setup, here it is presented to you in all it's glory:


Now for a more realistic story:

Bullish side story: We have initial resistance at 53.50, which we traded through in the session yesterday with the equity markets being closed in a day of national mourning from the passing away of President George H W Bush. We sank in the overnight session as the dollar remained strong. For the day, if we cannot hold 51.17 we will be in a sorry state of affairs and the bullish story vanishes. If we hold 51.17 we could scale all the way into that initial resistance area (53.50) especially after the EIA inventory news.

Bearish side story: The API inventory estimate for yesterday was as follows:

Crude: Previous 3.453 Million Actual 5.360 Million

Gasoline: +3.60 MB

Distillate: +4.3 MB

The bearish side does have a nice conservative story to paint as the trend is lower.

Here is the less aggressive setup and on a news day - you need this in your back pocket.

We are working on a short setup as a measured move from yesterdays high (54.45) to the new low of 50.23 made here in the European session. While the news will bring a classic dip into the Fib .618 retracement level, the most conservative short setup looks a tad bit like this:




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About the author

Murali Sarma, Vice President of Business Integrations Inc., is an internationally known commodities analyst, author, trader and business consultant who has demystified commodity trading and introduced numerous futures trading strategies and indicators to traders - professional, non-professional and the novice trader - throughout the world. Murali began his trading career in the pre-dot-com bubble in 1998, electing to seek instruments to trade which had lesser volatility and offered more predictable analysis. From about 1999 to 2002, Murali traded out of the UK and moving to the US after that and working mostly independently with individual traders while learning from some of the best analysts and traders. While not being formally certified as a commodities trader, Murali preferred to hone in on his analysis and trading skills versus adding academically to his credentials. Murali believes that is isn’t about being right or wrong on your calls, it is about making money!

Murali has helped several traders become successful over the last 10+ years of active futures trading and has a strong following of traders who like to seek out opportunities in the futures markets on a daily basis versus following the old “buy & hold” investing adage. While not being opposed to switching hats and becoming an “investor” every so often with swing trades in the equities markets, Murali prefers to trade what he can see on charts using multiple timeframes and handcrafted indicators suited for all types of markets. Murali excels in trading sideways and choppy markets with a scalping style of being in-out of intraday markets when there is no defined trend, and on most other days prefers trading to his own computed target levels during the intraday timeframe, while following the trend.

In recent months, Murali has started a Twitter based alert service for intraday futures traders who like to trade commodities and index futures, and elected to blog post his daily analysis in commodities like WTI Crude & Gold and index future instruments like YM, NQ, ES & RTY. You may contact him via his email at

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