WTI Daily Rewind 18Sep18: Price Discovery Higher To Key Resistance As Balance Continues Amidst October-November Liquidity Roll

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Includes: BNO, DBO, DNO, DTO, DWT, OIL, OILD, OILK, OILU, OILX, OLEM, OLO, SCO, SZO, UCO, USAI, USL, USO, USOD, USOI, USOU, UWT, WTID, WTIU, XLE
by: Sharedata Futures

Summary

Globex price discovery lower to 68.29s into key demand, buying interest there into the London auction.

Price discovery lower in the NY auction to 70.17s in the November contract, selling interest emerges as balance development ensued, 70.17s-69.10s.

Tuesday’s auction reflects continued balance development within last week’s key near-term supply and demand areas as liquidity rolled from the October to November contract.

In this article, we examine the significant daily order flow and market structure driving WTI price action.

18 September 2018:

As noted in Monday’s WTI Daily, failure of the sell-side to drive price through key demand, 68.50s-68.35s, would negate any sell-side bias that had developed based on Monday’s buy-side failure at key supply and the potential trapping of buyers into the NY close. Key demand, 68.50s-68.35s, was tested during Globex where buying interest emerged, halting the sell-side auction. Price discovery higher then ensued to 69.73s into the NY open. Balance developed early in NY before buy-side continuation developed to 70.17s where selling interest emerged, halting the buy-side auction. Sell-side rotation developed to 69.10s, where buying interest emerged ahead of the NY close, settling at 69.59s.

Tuesday’s auction saw early Globex selling from Monday’s close, achieving the Globex stopping point low, 68.29s, at/near key demand noted in Monday’s analysis. Buying interest emerged within prior demand ahead of and during the London auction. The order flow sequence shifted buy-side, driving price higher, achieving the Globex stopping point high, 69.73s. Responsive selling entered there, developing balance, 69.73s-69.34s, into the NY open.

Two-side trade continued early in NY as a pullback developed to 69.22s, where buying interest emerged. Rotation back to the balance high developed as initiative buying entered, 69.80s, driving price higher in buy-side continuation, achieving the stopping point high, 70.17s, at/near Sharedata’s average daily range high target, 70.06s. Selling interest emerged there, halting the auction, driving price lower as the market pulled back to 69.10s at/near the key demand area from earlier. Buying interest emerged there driving price modestly higher to 69.62s ahead of the NY close, settling at 69.59s.

NinjaTrader

Our first daily inference (68.35s holding as support) played out as Globex selling interest early in the Globex auction was halted. Subsequently, a buy-side auction developed toward Sharedata’s average daily range high target where selling interest halted the buy-side phase as balance development continued amidst the Oct-Nov contract roll.

The key support that developed in Monday’s auction held during Tuesday’s auction as the market traded back toward key supply. Despite the rejection of the high, large buying interest developed, 69.39s-69.53s. Real directional movement is likely after the Oct-Nov contract roll completes. Looking ahead, the highest probability path for Wednesday’s auction would be for price discovery higher barring the development of a structural sell excess.

NinjaTrader

As noted in last week’s WTI Weekly, seasonal price weakness in confluence with continued extreme bullish posture in the Managed Money suggests headwinds for WTI trading beyond the key supply cluster overhead (72s-75s). Today’s development of buying interest sequentially higher within developing balance implies near-term potential for price discovery higher.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.