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Crude Oil Price - August 16, 2013

The WTI Crude Oil markets as you can see tried to rally during the session on Thursday, but failed to hold onto any significant gains for the day. This shooting star of course is a sign, but what I think this market is telling me is that it is confused more than anything else. After all, there are three hammer like candles before the shooting star and that normally means consolidation at best.

With a look at the chart, I've been saying for some time that the $109 level is resistance, while the $103 level is support below. I think we are stuck in this consolidation at the moment, and I find this interesting considering that the US dollar got absolutely pummeled during the session, but oil itself just did not pick up. In other words, there may be a new paradigm in the relationship considering that a lot of the US dollar weakness was predicated upon weaker economic numbers than anticipated. That should underline how much the supply and demand equation has been skewed lately. Simply put, the markets are giving much more positive news for oil than is warranted.

Crude Oil Price Aug 16

Federal Reserve still controls this market though.

And the Federal Reserve and whether or not it's going to taper off of quantitative easing in September or October is still the main question. After all, the value the US dollar greatly impacts this market over the longer term. Nonetheless, we are in the dead of summer, and as a result the volume just simply isn't there. I don't trust this market at the moment, and quite frankly would only use it to scalp from time to time as we approach the outer limits of the consolidation range. Otherwise, I have absolutely no interest in this market until the second week of September.

It is at that point in time that we should get a feel for what the Federal Reserve is going to do, barring some type of announcement before then. Obviously, if they do announce their intentions on quantitative easing, that will have a great impact on this market. Until then, expect a lot of choppiness.

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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