Crude Oil Price - Mar. 5, 2013

Christopher Lewis

The WTI Crude markets fell during most of the session on Monday, but as you can see it got a significant bounce by the end of the session. This formed a hammer, and as a result a possible buying opportunity. The market is most certainly in a down trend, but there is definitely room for a bounce at this point. The $90.00 level was an area that I have pointed out in the past, and expected to see support come into play. This is one of the things that I love about this market, the fact that it is so technical.

The area could be the bottom of a just now forming consolidation area, which I think would have a top of roughly $98.00 or so. The market has been selling off aggressively, and I think this has been mainly predicated upon the idea of a strengthening US dollar, and not necessarily a shift in the economies around the world. After all, not a whole lot has changed, except perhaps the political situation in Italy.

Short-term move

I think the next move is higher, assuming we can break the top of the range for Monday. This is essentially a break of the $91.00 level. The area has about two or three dollars of room before resistance comes into play, and because of this I think the initial push could be relatively strong. However, the $94.00 area could be a hiccup waiting to happen for the buyers.

This set up is interesting to me because of several other markets. The gold market looks like it is trying to find a bit of a bottom, and the “Dixie”, or US Dollar Index looks ripe for a pullback. For that matter, the AUD/USD pair looks like it is going to form a hammer for the session, showing potential USD weakness. However, I am not necessarily thinking that the Dollar is going to decline for very long. I just think that the move needs to pull back. This should allow commodities to bounce for the moment, before more bearishness comes into play. Although I see a potential consolidation area up to the $98 level, I am for the moment assuming that this is only a short-term move.

Crude Oil

About the Author
Christopher Lewis

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.

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