The WTI Crude market fell during the session on Friday as the Non-Farm Payroll numbers came out of America at half of what was expected. However, you can see that the $92.00 level offered enough support to make this market bounce and form a hammer. It's difficult to see what happens next, beyond the next couple of dollars as the market seems to be constricting.
With the slow season approaching, I cannot help but wonder whether or not traders are trying to find the range that the market once the settlement spring and summer. Nonetheless, I see a significant amount of support down at the $90.00 level, and do not think that we will break below that level anytime soon. The hammer that we formed during the Friday session certainly would suggest that as well, as the $92.00 level was more than enough to support the market.
On the other hand, the $98.00 level looks very resistive. Because of this, I think we are simply kind enough to become a range bound marketplace, with the highs being have the aforementioned $90.00 level, and the lows to be somewhere around the $92.00 level, or possibly as low as $90.00 if we managed to break down below the bottom of Friday's range. Either way, the main theme here is that this will be a short-term traders market for the foreseeable future.
Range bound markets can make large profits
If you have the ability to trade the market on the shorter-term frames, carving out a range to trade actually is a very profitable way to get involved in the marketplace. We simply sell of the high, and by of the level as you would expect. The fact that the market wants to chop around so much really shouldn't be surprising, as the old expression "sell in May and go away" could be coming to fruition. Obviously, we are in the beginning of April, but it does appear that trading is slowly just that already. We have seen major "risk off" periods after the month of March for the last three years in a row, and as a result I think we may be getting ready to enter that phase again. During that time period, oil bounced around quite a bit, but if you were nimble – it was a great market to trade.
