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Crude Oil Price- August 29, 2013

The WTI Crude Oil markets rose during the session on Wednesday, but as you can see ran into far too much resistance above the $112 level in order to hang onto the gains. In fact, this market looks like it suddenly is running into serious trouble, at least for the moment. I still think that this market eventually will continue higher, because the shooting star that formed for the day sits just above a significant consolidation area, which of course should prove itself to be supportive. That being the case, I am not prepared to short this market, although I think the move based upon Syria is absolutely ridiculous.

A lot of this is probably due to the fact that there is a serious lack of volume in the markets at the moment considering we are at the end of the summertime. Because of this, I feel that the markets will continue to be very choppy and dangerous, and only the trader that has plenty of capital and nerve should be involved in this market at the moment.

The Federal Reserve will matter more than the Middle East

In the end, I still believe that the Federal Reserve will determine the direction of oil over the longer term. This isn't necessarily directly, but it does happen as a result of the US dollar and its value in general. They are going to decide on tapering for the month of September, but having said that nobody knows exactly what's going to happen. If they do in fact taper off of quantitative easing, that will be very bullish for the US dollar, which of course is what this contract is priced in. So having said that, it makes sense that the market would fall if the US dollar is worth more, simply because it takes less dollars to buy "things."

On the other hand, if they do not taper, this would continue the ridiculous amount of quantitative easing that the Federal Reserve has been embarking on for ages now. If that's the case, you can expect oil to go through the roof. In the meantime, this is going to be a lot of drama and quite frankly a dangerous market to trade.

Crude oil 82913

Christopher Lewis
About 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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