The WTI Crude Oil market rallied rather hard during the trading session on Friday, as we continue to see a lot of volatility overall. By bouncing the way, we have, it looks like we’ve had a little bit of a short covering rally, but I do believe that “market memory” could come into the picture.
The $86 region was previous support, so it should now be significant resistance. Regardless, I do think that it is probably only a matter of time before we see sellers come back into this market and pressed the downside. After all, there is a lot of concern when it comes to global demand, which most certainly will be shrinking at this point. With a global recession on the way, it is difficult to imagine a scenario where the market suddenly takes off as demand is almost certainly going to continue to drop.
Looking for Signs of Exhaustion to Jump in Into the Market
- It’s also worth noting that OPEC is in the process of trying to fight lower pricing, as they claim that the paper market is not reflective of the physical market.
- They have recently cut by 100,000 barrels per day, but it remains to be seen if that has any longer-term effect.
- Ultimately, I think this is a market that is also technically deteriorating as we are watching the “death cross” form.
- The 50-Day EMA has broken below the 200-Day EMA, and that tends to attract a lot of attention in and of itself.
Even if we do rally from here, it’s very likely that we will see plenty of resistance near the $90 level, and of course the 50-Day EMA. Any signs of exhaustion will be jumped on by traders next week, and I think part of what we may have seen during the day was not only a reaction to the US dollar losing strength but also a bit of short covering heading into the weekend. After all, the weekend does not allow people to react to headline news, which could happen at any time in this type of environment. Either way, I’m looking for signs of exhaustion to jump on sometime next week so I can continue shorting this market. This will be especially true if the US dollar continues to strengthen. If the market were to break above the moving averages, then we could see a trend change, but right now I don’t see it happening.
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