The WTI Crude Oil markets fell significantly during the session on Wednesday, falling as low as the $92.00 level. The crude oil markets in the United States reported that there was less in the inventories than anticipated, and as such this of course was bullish for oil in general. Because of the bounce, we have formed a massive hammer.
The hammer closed just below the $94.50 level. I believe that this market is trying to bounce again, and perhaps head towards the $97.00 level before it's all said and done. That being the case, I think that $92.00 is starting to show itself as significant support, and this could be setting up the summer trading range.
This market is well known to have a tendency to trade in a range during the summer months as traders that away from their terminals. This being the case, a $5.00 range between the $92.00 and $97.00 level isn't exactly a stretch of imagination. Quite often, this market does trading either a $5.00 range, or sometimes in times of volatility, $10.00 for the range.
Sell in May and go away
There is an old axiom in the trading world says "Sell in May, and go away." This could be essentially what we are getting ready to see as many of the traders around the world that truly have the firepower to push the markets around will be on vacation. If that's the case, this market could get rather choppy, and somewhat directionless.
This doesn't mean that the market can't be traded. Quite frankly, this can be a better trading opportunity for smaller retail traders than the rest of the year. If you have an obvious $5.00 trading range that you are working in, this makes trading the markets that much easier. You simply sell at the top of the range, and by at the bottom. If you look through these charts for historical data, you will see that this market just loves finding these types of ranges to work within. In the summertime, it's almost mandatory for them.
