Crude Oil Price - Feb. 22, 2013

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By: DailyForex.com

The WTI Crude market fell again during the Thursday session, managing to close below the $93.00 handle. However, we are in the middle of a cluster in this general vicinity, so support would be expected. Nonetheless, I fully expect this market to continue lower, and eventually test the $90.00 handle.

A simple way to trade this type of market is to short this chart on a break of the lows from the Thursday session. It's obvious that the downside momentum is picked up over the last 48 hours, and as a result we have to pay attention to the market, and what is telling us. What it is telling us, in my opinion is that a lot of the rally has been based upon the Federal Reserve and its quantitative easing. After all, a lot of the selloff has been based upon the Federal Reserve minutes that came out on Wednesday suggesting that some members were actually thinking about ending the quantitative easing measures sooner than anticipated. This of course had the markets panic, and several commodities got absolutely slaughtered.

Real support

In this marketplace, I see the real stretch support down at the $90.00 level. Granted, I can make a case for $92.00 as well, but in reality the market has been fairly parabolic over the last couple of months. Typically, parabolic markets in tears for buyers to do not get out quick enough. The real question of course is how many of those traders are still involved?

Going forward, I expect a pullback to the $90.00 level will offer a nice buying opportunity, and those of you who are patient enough to wait for that move should be rewarded. However, if I see some type of supportive candle right around the $92.00 level, I would be more than willing to take that one as well. It isn't quite the major support level that the $90.00 level is, but it is significant enough for me to trust that the support could hold. With that being the case, I do plan on buying this market, and will not short it anytime soon. Sometimes it's just a matter of waiting for the market to come to you.

Crude Oil

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.