CL1! (Crude Oil) Bullish Rejection at VWAP + FVGHey traders, let's dive deep into this setup on Light Crude Oil Futures (CL1!) on the 1-hour timeframe. We've been seeing some intense price action lately, fueled by ongoing geopolitical headlines like the Iran situation, which has kept oil volatile and trending higher overall. If you're eyeing commodities for quick swings, this could be a high-reward opportunity – but as always, manage your risk!
Historical Price Action Recap
Crude Oil has been in a strong uptrend over the past few sessions, forming a series of higher highs and higher lows as it climbs from the low 80s. Starting from around $88.00 earlier in the week, price pushed aggressively upward, respecting an ascending demand trendline and building momentum through multiple Fair Value Gaps (FVGs). These FVGs represent areas of inefficiency where price moved too quickly, leaving unfilled orders that often act as magnets for future liquidity grabs.
We saw a brief consolidation phase around $92.00-$93.00, where buyers defended the lower FVG zones, preventing a deeper pullback. This led to a breakout above $94.00, but not without testing key confluences like the Volume Weighted Average Price (VWAP), which has been acting as dynamic support/resistance. The recent candles show a sharp dip into the $93.00 area, where price encountered the combined VWAP line and an overlapping FVG – a classic liquidity zone that bulls were expected to raid for stops below recent lows.
Current Setup and Key Technical Elements
Right now, at $95.11, we're witnessing a clear rejection at the VWAP + FVG confluence (labeled on the chart around $93.50-$94.00). This "VWAP + FVG Rejection" is a bullish signal: Price dipped to sweep liquidity in what appeared to be a bullish trap zone – an area where smart money likely accumulated longs by inducing retail sellers to exit prematurely. The rejection is evident in the long lower wicks on the recent red candles, followed by a strong green reversal candle that closed above the zone.
Liquidity Zone Details: The bullish liquidity zone here is defined by the lower FVG at approximately $92.20-$93.00, extended down to $91.00 in case of deeper sweeps. This area aligns with prior session highs/lows and acts as a pool of stop-loss orders from shorts. By rejecting this zone without breaking lower, bulls are reloading, confirming the uptrend's integrity.
Indicators in Play:
VWAP (Blue Line): Curving upward, providing support during the dip. The rejection off this line suggests institutional buying interest.
FVGs (Green/Teal Rectangles): Multiple stacked FVGs from $88.00 up to $94.40, creating a ladder of support. The key rejection happened at the mid-FVG level, invalidating any bearish breakdown attempts.
Candlestick Patterns: Recent action shows a hammer-like reversal at the low, followed by engulfing bullish candles, indicating shifting momentum from sellers to buyers.
Volume Profile: Not explicitly shown, but implied higher volume on the upside bars, supporting the rejection narrative.
Broader Context: On higher timeframes (e.g., 4H), oil is respecting an ascending channel with the lower boundary around $90.00. Geopolitical risks (e.g., Middle East tensions) add fundamental tailwinds, potentially amplifying this technical bounce.
The overall structure resembles a bullish continuation pattern – think of it as a pullback within an uptrend, similar to a flag or measured move, where the rejection acts as the "reload" point for the next leg up.
Trade Bias and Scenario
My primary scenario is bullish as long as price holds above the rejected FVG zone ($93.00). This rejection invalidates short-term bearish pressure and sets the stage for a rebound. We're likely in a liquidity hunt phase where price swept lows to grab stops before resuming higher – a common SMC (Smart Money Concept) play.
If Bullish Confirmation Holds: Expect a steady grind higher, targeting unfilled FVGs above and psychological levels. Geopolitics could accelerate this if news escalates.
Bearish Invalidation: A close below $92.00 would negate the setup, potentially leading to a deeper correction toward $90.00 or the next FVG at $88.00. But current momentum favors bulls.
Entry, Targets, and Risk Management
Entry Point: Look for longs around $95.00-$95.50 on a retest of the recent high or after a minor pullback to the rejected zone (if it holds as support). Wait for confirmation like a higher low or bullish candle close.
Stop Loss: Place below the rejection low at $93.00 (tight) or $92.00 (safer, allowing ~2-3% risk depending on position size). This protects against false breakdowns.
Take Profit Targets:
TP1: $97.00 (next resistance and partial FVG fill, ~2% gain – scale out 50% here).
TP2: $98.50 (psychological round number and upper channel resistance).
TP3: $100.00 (ultimate swing target, aligning with prior highs and a measured move from the rejection – full exit for ~5%+ upside).
Risk-Reward Ratio: Aim for at least 1:3 – with a 2% risk, you're looking at 6%+ potential reward to TP3.
Position Sizing: Keep it conservative; use 1-2% of your account per trade. Monitor volume for confirmation – spikes on upside bars would be ideal.
This setup has strong confluence across technicals and fundamentals, making it one to watch for virality if oil spikes. What do you think – bullish to $100 or rejection incoming?
Long
