WTI is suffering a nasty sell-off today, and our short alert this morning for premium members, to short a breakdown of the weekly pivot low, and 4day adaptive channel low @ 68.50 is nicely in the green.
We always hedge futures positions, especially when shorting oil, so the question is what to do next? Using our data science application we can easily observe how WTI has traded given specific conditions, whether it is price activity, trends, COT positioning or other price signals.
Over the past 2 years, WTI has only traded down over -3.5% 11 times. Price distribution 5 days forward is as follows.
You can see that 5 days forward, after a close of 3.5% or lower, in 70% of all cases prices will advance .94 while decline -1.48 for odds of 2:3 in bears favor.
We anticipate a small reactive bounce in the next day or so to form a bear flag on the 60min charts, and then a break to new lows. Aggressive traders can use a break of today's close to add to current shorts, and look to cover the entire position on the anticipated $1.50 drop from here.