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WTI Weekly: False Breakdown Early Week, Price Discovery Higher To 55.66s

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Sharedata Futures


  • False breakdown in Monday’s auction to 51.33s, buy excess develops there.
  • Rotation higher through mid-week, buy-side breakout Thursday/Friday and price discovery higher to 55.56s.
  • This week saw a false breakdown below last week’s balance before rotation higher developed to 55.66s into week’s end.

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

As noted in last week’s WTI Weekly, the primary expectation for this week was for sell-side activity provided the near-term stopping point high, 54.52s, held. This expectation did not play out as a false breakdown developed early week at key support, 51.85s. Rotation back through the developing balance occurred through mid-week before a buy-side breakout and price discovery higher developed to 55.56s into week’s end.

WTI Composite 25Jan19

27 January-01 February 2019

This week’s auction saw selling interest in Monday’s trade as a sell-side breakdown attempt through key support, 51.85s, developed, achieving the stopping point low, 51.33s. Buying excess emerged there, rejecting the low, as buying interest in size, 51.54s-51.70s, drove price back into prior balance. This structural development was indication of a false breakdown and implied potential price discovery higher. Price discovery higher developed through Tuesday and Wednesday’s auctions as the market challenged key resistance to 54.93s. Buyers trapped there as a pullback developed to 54s into early Thursday’s auction.

Following Thursday’s pullback to key demand, 54s, buying interest emerged there, driving price higher in minor range extension to 55.37s. Buyers trapped there in size, driving price lower once again back into the key demand cluster, 54s-53.50s, ahead of Friday’s auction. A minor probe lower developed early in Friday’s auction to 53.37s. Minor buying excess developed there before buying interest drove price higher to challenge Thursday’s stopping point, achieving the weekly unsecured stopping point high, 55.66s, ahead of Friday’s close, settling at 55.26s.

WTI Weekly I 01Feb19NinjaTrader

As noted last week, this week’s primary expectation was for sell-side activity provided key resistance, 54.51s, held as resistance. This expectation did not play out as an early week false breakdown resulted in rotation back through the developing balance to challenge key resistance. The false

This article was written by

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Historical Data Mining & Visualization for NYMEX energy markets. Our experience derives from the proprietary trading world involved in US Index derivatives, commodity ETF derivatives, and exchange-traded NYMEX WTI derivatives.Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Analyst’s 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

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@jog222 Thanks for reading and the positive feedback, much appreciated!
Great analysis!
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