Crude oil markets demonstrated a degree of stability during Friday's trading session, hinting at a possible respite from the recent selling pressure.
The West Texas Intermediate Crude Oil market exhibited resilience during Friday's trading session, despite the unexpected impact of the Non-Farm Payroll announcement. This raises questions about whether the market could rebound, driven by the robust employment situation in the United States, which suggests strong demand. If the market manages to break above the day's high, it could set its sights on the 50-day Exponential Moving Average.
Beneath the current price action, the 200-day EMA acts as a crucial support level. The market appears to be oscillating between these two significant moving averages, a scenario often associated with market consolidation. Shorting this market doesn't seem prudent given its oversold conditions, making it likely that the overall trend will continue to evolve.
Brent markets are also in the process of stabilizing, hovering around the 200-day EMA. The 200-day EMA is an important indicator closely watched by many market participants, signifying a noteworthy level of support. A potential break above the day's high could mark the beginning of a more substantial recovery in a market that currently appears oversold.
Avoid Shorting the Market
- While approaching this market cautiously is wise given its current disposition, initiating a modest long position seems reasonable, acknowledging the inherent volatility in the market.
- The next significant support levels to watch for are likely around $82.50 and possibly $80.
- On the upside, surpassing the 50-Day EMA could trigger a surge in FOMO (Fear of Missing Out) trading, reflecting the ongoing challenges related to supply in this market.
In conclusion, crude oil markets have managed to find some stability amidst recent selling pressure. The positive employment situation in the United States and the presence of key moving averages as support levels provide some optimism for potential rebounds. Given the oversold nature of the market, shorting it appears unwise, and the prevailing trend suggests a likelihood of continuation. However, traders should exercise caution and be prepared for the inherent volatility in the market as it navigates its path forward.
Potential signal: At this point, I am looking to buy oil, and will do so with a stop loss at the $81 level. As for target, I am think thing is more “buy and hold” at the moment.
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