The crude oil markets displayed a significant rally during Tuesday's trading session, driven by considerable upward pressure, only to turn around and drop later.
The West Texas Intermediate Crude Oil market demonstrated substantial strength on Tuesday, with robust bullish momentum continuing to dominate. The market then fell, as gravity is still in question. However, this relentless ascent should be approached with caution. It's essential to acknowledge that markets don't ascend indefinitely, and the age-old adage "what goes up must come down" holds true. This sentiment has been echoed for several days now.
Given this scenario, it's prudent to exercise patience and await a potential pullback, ideally towards the $90 level, or even down to $87.50, before considering entry. While the oil market undoubtedly has the potential to reach higher levels, it's important to remember that such journeys don't happen overnight. This situation could be a very dangerous set of circumstances for newer traders, however professional traders will recognize the fact that eventually you will get a better price to start buying again. In this environment, shorting is impossible, but that doesn’t necessarily mean that you should be chasing the trade at this point.
Waiting for a Pullback
- The Brent markets have also experienced a rally, with a determined push towards the $95 level. However, just like the WTI grade, the Brent market fell a bit.
- Breaking above the $95 level could open the door to a move towards $97.50. However, like the WTI market, caution is warranted as the current momentum may be a tad overextended.
- However, a pullback could be a reasonable expectation as the market seeks to attract more buyers.
The $90 level is likely to draw significant attention, being a substantial, round, and psychologically significant figure that has previously acted as significant resistance. Beyond that, the $100 level appears as a plausible target, and it might be the destination in the coming weeks or months. If Saudi Arabia and Russia continue to limit production, it becomes increasingly challenging to envision a significant and sustained market downturn.
In conclusion, the crude oil markets experienced a notable rally marked by strong upward pressure early, only to give it up. In the WTI Crude Oil market, caution is advised as the current surge may necessitate a pullback before considering entry. Similarly, in the Brent markets, an eye should be kept on potential pullbacks, with $90 serving as a key level. The possibility of reaching the $100 mark remains on the horizon, given production cuts by Saudi Arabia and Russia, suggesting a bullish sentiment in the medium term.
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