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Crude Oil Price - August 20, 2013

The WTI Crude Oil markets fell slightly during the session on Monday, as you can see by the hammer like candle on the chart. However, it doesn't look like there is enough momentum to move this market in either direction at this moment in time. The $108 level continues to be resistance, and quite frankly I feel that this resistance area probably runs all the way up to the $110 handle. With that being the case, it's almost impossible to start buying this contract at this moment as there simply is no room to move in the risk to reward ratio is absolutely atrocious.

However, you can easily make an argument for not selling either. This is because there are plenty of supportive looking candles just below the current pricing area, and as a result I feel that any pullback will more than likely be met with buying pressure. If that's the case, then I see no reason to think that you should bother trading this market at the moment.

Crude Oil Chart Aug 20

Summer is almost over

This market tends to be very quiet during the summer. Ironically, North Americans tend to burn a lot more oil during this time a year but you have to keep in mind that the increase in usage is already been priced into the marketplace. With that being the case, we simply want this market to go sideways during this time of year 9 times out of 10.

On top of that, the Federal Reserve is being watched at the moment to see whether or not they will taper off of quantitative easing. If they do, that will be very supportive for the US dollar which of course this contract is priced on. That would obviously drive the price down. I firmly believe that the market is simply waiting to see whether or not they will do that in the month of September. Compound that with the fact that the liquidity typically doesn't come back to this marketplace until about the middle of September, I can see that we are going sideways for the short term.

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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