The crude oil market has been in a nice, steady downtrend. Usually the oil markets are high volatility monsters that are hard to catch a move on, but you can’t ignore trending conditions like this.
We’re seeing a bearish reaction to what we call a ‘bearish hot spot’ on the daily chart here on WTI crude oil. A ‘hot spot’ is basically an area on the chart that produces high probability trade signals. Today’s signal candle is a bearish rejection candle.
The range of the candle is a little small, so we prefer to wait for breaks of the low to confirm bearish momentum. Remember WTI is a US market so its most likely to breakout during the New York session. Be cautious of early breakouts in the Asia session, which could lead to a breakout trap.
Hopefully we will get a nice clean breakdown in price here and see the next extension of this trend develop.