Crude Oil Price - May 1, 2013

The WTI Crude had a negative session on Tuesday, pulling back from just below the $95.00 level. I have been speculating recently that we may have just entered a previous consolidation area, and that we could see a bit of choppiness between the $92.00 level on the bottom, and the aforementioned $95.00 level on the top. If that's the case, we are looking in the short term scalpers type of market, and as a result you have to be nimble and be available to watch the charts in this type of environment.

That being said, this a reason to say that you can't trade this market, just that you will have to be fairly quick. With that being the case, you have to keep stop losses fairly tight, and be aware the fact that a break down below the $92.00 level would in fact signal an extreme bearish move coming, and at that point time you simply have to be short, and short only.

Alternately, if we managed to break above the $95.00 level, one would have to say that that is an extremely bullish position about to happen, and you would have to be long, and be long only. This of course would more than likely coincide with some type of dip in the value of the US Dollar, which is in fact something that we are starting to see now. Nonetheless, this isn't my base case.

Supply and demand

The supply and demand equation in this particular market is in fact good to be honest. Quite frankly, the demand just isn't there in a lot of countries. If that's the case, this seems to be more of an anti-dollar plane than anything else. In the end though, it doesn't really matter why price is going up - just that it is. Keeping that in mind, I am going to watch the range that I mentioned above in order to place a longer-term trade. I suggest that perhaps CFDs might be the way to play as the volatility could make trading the futures markets very risky as you might get whipped around. 

Crude Oil

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.