The WTI Crude Oil markets tried to rally during the session on Friday, but struggled as you can see. The resulting candle formed a shooting star, which of course is a bearish sign. However, I think this market has far too much in the way of possible support going down to the $99 handle, and as a result I think there is going to be much difficultly in breaking this market down. Below there, I see a ton of noise. In a sense, it makes my choice on trading this market simple: I am only interested in buying it.
However, I will need to see a reason to buy as well. The breaking of the top of the shooting star from Friday is an excellent one, but I would also be willing to go long of this market if we saw a supportive candle below, especially around the $100 level. That area is without a doubt one of the “largest numbers” that we could find in this market, no?
Federal Reserve and the US Dollar
I am tired of typing this quite frankly, but there is a massive correlation between the Dollar and Oil markets in general right now. The Federal Reserve looks likely to sit still as far as tapering off of quantitative easing is concerned, so this will work against the Dollar obviously. This will more than likely push the price of oil higher in general, and as a result I think this market will stay somewhat afloat – even if it looks a bit suspicious at the moment.
The consolidation should hold, and because of this I think we could see prices as high as $108 in the relative near future. The $104 level will need to be broken in order to get there, but there isn’t much to make me worry about whether or not that can happen at this point in time. Because of all of this, I am on the sidelines at the moment, but I am looking to buy given a decent set up or chance in the near term.