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Fundamentals

During the Asian session on Tuesday (October 17), WTI crude oil oscillated lower and is currently trading near $85.1 per barrel. Yesterday, oil prices remained fall to close lower after surging higher, simply because the Israeli-Palestinian conflict was not further intensified under the mediation of all parties, and the market sentiment was slightly eased. The thrust from geopolitical factors has faded for the time being and investors are confused about the direction. On the one hand, the Middle East situation is escalating, but on the other hand, the war did not reach the oil-producing countries, which can not be reflected in the impact of the supply of oil prices. The current situation may need to be viewed one step at a time, which could easily lead to a wide range of oil prices, characterized by sharp fluctuations. Now the 2-dollar fluctuation is relatively unusual, and for investors is more of a testing trade. The current supply and demand side of the oil market has not changed much, but the supply side of the previous support for oil prices appeared marginal loosening. In the absence of changes in demand, oil prices under low inventory make it difficult to change the current pattern of fluctuations within the range. At the moment, it is still recommended to take geopolitics as a reference, and others will be relegated to secondary influencing factors. The control of the rhythm of trading is more important for the current oil prices.

News: The US and Venezuela's Maduro government have reached an agreement. America will ease sanctions on Venezuela's oil industry, while Venezuela will hold campaigning, internationally monitored presidential elections next year.

Key focus: US Retail Sales September Monthly/Annual Rate, Industrial Output Annual Rate and Business Inventories Monthly Rate. Also watch for the following key events: tonight's speech by FOMC permanent vote member and New York Fed President John C. Williams at the Economic Club of New York, and API crude oil inventory data.

Technical Analysis

Yesterday, the price of U.S. crude oil rushed higher and closed with a small bear candle. The price rushed to the highest to 87 line, and the lowest retracement to 85.1 line. The understanding of the trend is still not clear. And the bulls appear to take profit, which is also a healthier way to rise - big up and small retracement. Back to the technicals, the MACD indicator has a tendency to show a golden cross at the bottom, and the extent of the price retracement may be limited. From the initial running box on the chart below, the support below may be at the 84.3 line, which is also where the 5-day and 20-day averages are located; if the price can retrace to that position, it will be a good opportunity to build positions. And if the price can break through yesterday's high of the 87 line, it may be expected to hit the 88 line.

Trading Strategy: It is recommended to buy low. If the oil price is sharply retraced to the 84.3 line, you can try to go long with small positions. Stop loss can be set at 83.8, and the first take profit target can be set at 86.8 line, where you can reduce the position size and move the stop-loss to breakeven. The second take profit target can be set at 87.8.

Trading Recommendations

Trading direction: Long

Entry price: 84.300

Target price: 87.500

Stop loss: 83.800

Support: 85.000, 83.800

Resistance: 87.700, 89.500