The West Texas Intermediate Crude Oil market rallied a bit on Friday, and of course was closed on Monday, at least in the futures market. The CFD markets haven’t really given us much in the way of directionality, so we have to look at this through the prism of how things ended on Friday.
That of course was right at the 50-Day EMA, which is an indicator that tends to offer a lot of resistance over time, and now it looks like we are going to continue to see a little bit of a fight in this area. That being said, if we break above the 50-Day EMA, then we could go looking to reach the 200-Day EMA, but between here and that area, any signs of exhaustion will almost certainly start shorting this market.
Demand Likely to Fall
- On the other hand, if we break above the 200-Day EMA, then it’s possible that the market could turn around completely. That being said, when we look at the chart, we can see what a massive turnaround we have seen recently, but we are still not in an uptrend.
- With that being the case, I suspect that sooner or later we will see some signs of exhaustion so we can start fading, because traders are starting to worry about global growth, and that of course has a major influence on what happens with the oil market, as oil is the “life’s blood” of the global economy and allows for the movement of goods.
- If we have the global economy slow down, then it’s likely that we will see demand for crude oil falling. The $75 level would almost certainly be tested at that point.
On the other hand, if we take off to the upside, I suspect that the $85 level will be a bit of a barrier, followed by the 200-Day EMA. I think that would take some type of fundamental reason to get going, perhaps the job number to make that happen, which doesn’t happen until Friday. Furthermore, if keep in mind that the markets won’t have to look at this whole situation through the prism of volume, and the lack of it. The Federal Reserve is the biggest effect on this market, so people will continue to look at this as a liquidity question.
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