The West Texas Intermediate Crude Oil market went back and forth on Wednesday as we continue to see a lot of noisy behavior in general. The 200-day EMA is an indicator that a lot of people pay attention to, and a certain amount of algorithmic trading will continue to come into the picture. The market breaking down below the bottom of the candlestick for the Wednesday session could kick off even more selling, but I just don’t see that happening right now. That being said, it is something I’m willing to trade if it happens.
A little bit of a bounce does make a certain amount of sense, but at this point, I think it probably has somewhat of a limited lifespan. Breaking above the top of the candlestick opens up the possibility of a move to the $100 level, and then eventually the $105 region. The market has broken through a major uptrend line, so need to pay close attention to the fact that we are continuing to see negativity.
When you pay close attention to what traders are looking at, one of the most important things is the fact that the global market seems to be heading toward a recession, and the demand for crude oil could slip. That might be what we are seeing on the charts, and it’s likely that we would see quite a bit of negativity. If we do break down for quite some time, then it’s likely that we could collapse as it would bring in the idea of a major problem.
On the other hand, if we were to turn around and break above the $110 level, then it is likely that we could go higher, perhaps reaching the $120 level. That’s where we pulled back from so violently previously, but I just don’t see that type of reversal. After all, it’s obvious that we continue to see a lot of negativity. Ultimately, I think this is a situation where we're looking very weak, and I think the momentum has most certainly shifted for the next big play. It’s also worth noting that the biggest candlesticks over the last several weeks have all been red.
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