Here is how we should have traded crude oil futures today based on Market profile Auction theory. From a proud student of Jim Dalton.
Today was the day of the oil inventory number. It is quite dangerous to trade before this number as the market usually exibits low volatility and just wait for the number at 10:30 EST. If you don't trade the number there were only a few opportunities offered by the market today.
The first good opportunity came around 11:00 when the market rejected the overnight high. Many factors were favoring the trade.
Firstly Overnight inventory was long.
Secondly we had a very prominent POC from yesterday meaning that value established yesterday was strong and we would need strong volume to get away from it
Thirdly we left a poor low yesterday . Poor Lows are eastablihed by small short term and day traders which indicates weakness and should eventually be revisited.
Fourthly we started a one timeframing down and re-entered yesterday's range.
The market just started trending from there for the rest of the day.
I think that this move down was caused by long liquidation from overnight longs and probably also fueled by new short established by short term traders on the way down once the tone for the market was established. The market left a lot of anomalies ( 4 ) reinforcing the old money theory.