The WTI Crude Oil markets fell during the session on Tuesday, slamming into the $101 level. This is an area that I have talked about previously as being rather supportive, and I think that it is more of a “thick zone”, and that it extends all the way down to the $99 level as well. The markets have been well supported several times in this region as the market continues to recognize the $100 level as a major psychological level as one would expect.
The candle for the day is red, and closed at the very bottom of the range. This of course is a relatively negative sign, and as a result it would not surprise me at all to see this market fall a little bit farther. However, I would expect to see some type of supportive candle in this general vicinity, and that's exactly what I'm waiting for in order to go long of the crude oil markets. After all, this is going to be propelled higher by the Federal Reserve and its inability to taper off of quantitative easing, which I firmly believe is going to be the case once the nonfarm payroll numbers come out.
Expect choppy conditions
I hate to say this, but I expect this market to be choppy regardless. This is more of a longer-term traders type market at the moment in my opinion, as I believe that the market will continue to go higher, probably searching for the $108 a barrel level. It's up there that I see a significant amount resistance, extending all the way to $110 or so.
Nonetheless, I do expect staying this range going forward simply because the markets have been so resilient over time. I understand that the supply and demand equation may not work in the favor of oil at the moment, but the US dollar very well could. Looking at the chart, I do see it being too difficult to short this market going forward. In fact, I see a lot of noise starting at the $99 level, and extending all the way down to $92, which of course is a long way away.