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Crude Oil Price - August 21, 2013

The WTI Crude Oil markets fell rather significantly during the session on Tuesday, parking just above the $105 level as you can see on the accompanying chart. However, one of the biggest problems I have with this market and this "sell signal", is the fact that we are currently going sideways with absolutely nothing to push the market in a confirmed direction that I am aware of. After all, even though we broke through several supportive candles during the session on Tuesday, we really didn't break down the significant support which I see at the $103 level.

Going forward, I still believe that it is the Federal Reserve that will determine the fate of the oil markets. If they decide to taper off quantitative easing, the US dollar should continue to climb overall, and that of course will force the price of oil lower. However, if they do not, I believe that the US dollar will decline in value, and oil will rise rapidly.

Crude OIl Price Aug 21

Thick resistance area

Regardless, if we do go higher it is going to be a fight to get above the $110 level in my opinion. This is mainly because the resistance starts at the 108 handle, but in the end stops at the 110 handle. That's a pretty thick area to chew through, and is going to take something rather significant to move the markets like that. Ultimately, it wouldn't completely surprise me to see a breakout to the upside, but I do not see it without the Federal Reserve's assistance.

On the other hand, a break down below the $103 level could send the market down to the 99 handle relatively quick, but in the end I think that area is going to be extraordinarily supportive and that should be the "floor" in this market. Below there is simply far too much noise for me to think that the markets can break down through it with any type of ease. Until we get some more clarity out of the Federal Reserve, I fully expect this market to continue in the range that it's been in over the last couple of months.

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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