The one thing you should pay the most attentive is the fact that we broke through a major uptrend line.
The West Texas Intermediate Crude Oil market fell a bit during the trading session on Thursday to crash through the $92 level. That being said, the market turned around and ended up forming a hammer. Quite frankly, this is a market that continues to see a lot of volatility and has been the bane of my existence. Yes, it’s a very negative market and it should continue to be so, but at this point, it is more likely than not going to be a situation where we fade rallies more than anything else.
That being said, we could get a little bit of a move to the upside, but that move will almost certainly be sold into at the first signs of trouble. The $100 level could offer a significant amount of psychological resistance just above, perhaps even the $104 level as it was where we broke from the last time. The fact that we ended up forming a nice hammer does suggest that we could get a bit of a bounce, but I think that’s going to be short-lived the way things have been going.
After all, there are a lot of concerns when it comes to the global economy, therefore it could suggest that there is going to be a certain amount of noisy behavior in the short term, and therefore you are going to need to be very cautious with your position size. In fact, this is a market that I have received a lot of emails about lately because it’s causing mass destruction in trading accounts.
Crude oil has a lot of different things moving at the same time, not the least of which will be supply. There are a lot of questions as to whether or not the president will be able to convince Saudi Arabia to produce more crude oil, so in theory that could drive down the price. Furthermore, there is also the possibility that they won’t, and that could drive prices higher. The other side of the equation is the fact that if the rest of the world slows down, then how much demand will there really be? In other words, it’s all noise at the moment, but the one thing I think you should pay the most attentive is the fact that we broke through a major uptrend line. Ready to trade WTI/USD? Here are the best Oil trading brokers to choose from.