- The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Friday, as we have threatened the $80 level.
- The $80 level of course is a large, round, psychologically significant figure that a lot of people pay attention to.
- Perhaps more importantly, we’re getting close to the top of the overall consolidation area.
WTI crude Oil Today's Breakout and Breakdown Scenarios
The $82.50 level is the top of this box, and as long as we stay below there, one has to think that we stay in this overall consolidation area. If we cannot break out to the upside, then it’s likely that it’s more back-and-forth noise than anything else. The 50-Day EMA sits just below, and that could offer a bit of support. On the other hand, if we do turn around and breakout above the $82.50 level, then it’s possible that the West Texas Intermediate Crude Oil market is looking to the 200-Day EMA. That currently sits right around the $85 level, and of course is an area that a lot of people will be paying close attention to.
On the downside, the $75 level should be support, and then again, we also have significant support near the $72.50 level. If we were to break down through there, then the bottom would fall out in the oil market. Having said that, we also have to pay close attention to the fact that the overall demand for crude oil is still in flux, as we are trying to figure out whether or not the global economy is going to pick back up, or if it’s going to slow down. One of the things that people look to the most right now is China, and the fact that perhaps they should demand more crude oil as they are finally stepping out of the lockdowns and starting to open backup. However, the economic numbers out of China have not necessarily been enthusiastic, so there is still quite a bit of hesitation.
The fact that we are closing at the top of the candlestick heading into the weekend is a good sign, but again, we have plenty of resistance just above. Until proven otherwise, I would have to believe that the market is simply going to go back and forth and undulate as we try to figure things out.
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