WTI Crude Oil Forecast: Crude Oil Bounces From Previous Neckline

• The West Texas Intermediate Crude Oil market pulled back a bit during the trading session on Tuesday but found the previous neckline of the inverted head and shoulders to bounce from.
• At this point, the market looks as if it is trying to get back to the $80 level, but I think there are a lot of problems out there when it comes to the crude oil market.

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The Crude Oil Market Is Going to Be Very Noisy

The first one of course he’s going to be whether or not the central banks will crush economic growth to fight inflation. If they do in fact manage to get the economies around the world to slow down, then it means that there will be a lot less oil needed. Furthermore, there are a lot of concerns that the Urals are going to produce as much as 50% more going forward, so that causes a lot of issues. That being said, the Chinese reopening situation does help the idea of oil rising, but we will have to wait and see how this actually plays out.

In the meantime, I suspect that the market is going to be very noisy as we are bouncing around between the neckline of that inverted head and shoulders and the psychologically important $80 level. Above there, we have the $81.50 level, which has offered quite a bit of resistance previously. If we can break above that level, then it’s likely that we could go to the 200-Day EMA, which is hanging around the $87 level. That obviously will attract a lot of attention, so anything above there really gets the market moving to the upside.

To the downside, if we were to break down below that neckline that I have drawn on the chart, the $75 level underneath will be the major support level. Anything below there then opens up the possibility of the market threatening the recent lows that we’d seen, so I think it looks very likely that the market will break down drastically at that point, perhaps try to get down to the $68 level. Regardless, I think this is a situation where we are probably range found in the short term, but by the end of this week we might have a bit more clarity, not only due to the FOMC situation, but also the jobs number coming out on Friday.

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