The Heating Oil futures contract has traded within a well-defined trading range over the last year of trading, which leads to an interesting dilemma now that it has reached major resistance.
Trading Range
The daily chart shows Heating Oil has traded within an unusually well-defined trading range that spans from $2.72 to $3.20 over the last year of trading. Almost every significant reversal in this market has occurred at the outer boundaries of this range, which is important because it is currently resting at resistance at $3.20.
If recent price behavior holds true, we could see another sharp reversal back toward the bottom of the range in the weeks ahead.
Volume Study
A look at the composite volume profile over the last 244 days shows price is indeed sitting at the ledge of a significant LVA. This low volume area indicates an area of unfair pricing, which means traders may begin seeking better value below.
If sellers defend the LVA resistance level (as expected), we could see price drop back down toward a previously established area of value, which is likely the VPOC at $3.05.
In essence, if resistance holds at $3.20 look for price to drop back toward the $3.05 area in the next week of trading. The $3.05 area could be the resting place before the next wave of selling pushes price even lower.
Should a violation of the LVA at $3.20 occur instead, look for price to max out in the $3.28 zone.
Thanks to DTG!
I’d like to give a huge THANK YOU to the Denver Trading Group for hosting me this past weekend!
Thanks for braving the snow and for sitting through 5 hours of discussion! The DTG is a first-class organization with great members and leadership, and I look forward to returning down the road.
TTT Hedge
I’ve been invited to speak for TTT Hedge tomorrow (Wednesday, February 8 at 11AM EST). It’ll be a lunch time webinar event and we’ll be looking at the markets through my eyes during the session.
Come hang out in the TTT Hedge trading room with Tom the Trader, Redlion Trader, Cathy, and others as they analyze and trade the market – FREE!
You can read more information on their website HERE!
Be sure to join the trading room early, as attendance is limited. Just click this link to get started: http://ttthedge.adobeconnect.com/traders
I look forward to seeing you tomorrow!
Cheers!
Frank Ochoa
PivotBoss | Own the Market
Follow Frank on Twitter: http://twitter.com/PivotBoss
