WTI Crude Oil
The WTI Crude Oil market had a very negative candle form for the Wednesday session, testing the $50 handle. That’s an area where I expect to see quite a bit of support, because of course is a perfect round number. But beyond that we have previous action at this level, and of course the uptrend line that I have on the chart. If we can break down below that level, and close below it, I believe that the market will continue to sell off and perhaps reach towards the $48 level. A bounce from here could be positive and send the market towards the $52 handle above, but the attention to the US dollar because of that starts to strengthen, that will work against the value of crude oil.
Natural Gas
The natural gas markets initially tried to rally but look very overextended at this point, as we ended up forming a shooting star. That looks like a very negative turn of events, as we had formed a shooting star during the previous session as well. I think that the market will probably reach towards the $3.50 level underneath, and perhaps even lower than that. Ultimately, I have no interest in trying to short this market though, because we have seen so much in the way of bullish pressure in this market. I believe that the previous uptrend line is where the “floor” in this market is, which is a long way below. In the meantime, we will probably see this market drop, but I tend to favor the longer-term move, so therefore I am a bit skittish to start shorting even though I fully anticipate that the market is going to drop.
Alternately, I believe that the market will continue to find quite a bit of volatility as it typically does, but there are structural problems longer-term as far as supply is concerned see you have to keep that in mind as well.
