Today Crude Oil offered us two good opportunities with good risk-reward potential.
There were a few resistance levels right from the start that I have mentioned in my twits this morning. Yesterday's low at 44.41 and the high of the lower distribution from yesterday's profile at 45.19.
Furthermore overnight inventory was short when the bell rang this morning as we opened on a gap down. The Gap rules were in effect.
What are the gap rules ?
1 -If the gap is not filled pretty quickly - go with the gap
2 -If the gap is filled and value cannot at least be similar value to the prior day, odds of a later move in the direction of the gap are likely.
The market filled the gap immediately and form a balance bar in B. The structure was giving us a potential long above B or a potential short below B. The beakout happened really fast at 44.41 you had to be ready for the trade. Not only did we have a breakout but the market was also re-entering inside yesterday's range which is always something that we can't ignore as a trader because it can signify a rejection of the gap.
The market traded up to 45.16, 3 ticks shy of the resistance at 45.19, 3 ticks above overnght high and right at yesterday's low value area. This is where the second opportunity came along. A short with a stop placed somewhere above 45.19.
After that move the market traded back and forth which formed a prominent POC increasing the odds of a rotating market for the rest of the day.
Value was down for the day.