Buyers Absorb Supply at 101
Crude Oil has experienced some great volatility on a swing basis over the last few months, but recent trading has been more muted, as buyers and sellers are jockeying for position ahead of the next key wave of movement.
Last week saw responsive sellers absorbing demand above the micro composite value high (VAH) of 103.17, which ultimately led to a move through MCVPOC at 102.20 and to the other side of value at 100.92. In essence, swing bears scored a victory as they were able to take price across value for a move worth over 3 points.
Now the ball is in the court of the responsive buyers, who are currently defending the value low (VAL) of the micro composite range at 100.92. As a matter of fact, the footprint over the last two sessions shows a fair amount of sell imbalances that have formed at or below the 101 key level, only to see price rally back above this zone later in the day. This is the smoking gun showing responsive buyers absorbing aggressive supply, and winning the battle. At least for now.
Buyers Looking to Squeeze the Shorts
The buyers who are currently defending price off the 101 key level are attempting to run the upside buy stops of the sellers that entered the move off the 103 key level last week. Anyone still holding short positions is at risk to have their stops run, which could trigger a cascading effect into 103, and potentially higher. That is, if buyers can take VPOC bid through 102.20, we could see a rally back toward resistance at 106.11, with scaling points at 103 and 105.13.
Here’s the kicker: if buyers fail to get VPOC to go bid through 102.20, they become at risk to have their sell stops run below 101 into the 100.55 LVN, and potentially lower. Responsive buyers will want to defend as low as 100.55, but failure to hold this level opens the door to more selling pressure, likely toward prior support at 98.26, with scaling points at 99.83 and 98.96.
For now, responsive buyers are winning the current battle, but all eyes are on 102.20.
Cheers!
Frank Ochoa
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