The WTI Crude Oil markets initially tried to rally during the session on Tuesday, but as you can see ran into a lot of trouble just above the $100 level. The pullback resulted in the market falling well below the $99 level, the area that I suggested was the very bottom of the supportive "zone" that the market would have to break through in order to really begin to selloff with any type of ferocity. That being the case, and the fact that we didn't do so, I believe that this market really could run into serious trouble soon.
However, you should keep in mind that there is a lot of noise all the way down to the $92 handle, and as a result it will be a straight shot down. Because of this, I am actually planning on shorting this market every time it rallies, but from the shorter timeframe charts as I suspect this will become a rather choppy affair all the way down to the $92 handle. I find this interesting, because the US dollar is actually getting pummeled at the same time, but I believe this is more of a concern about demand going forward than anything else.
US dollar correlation breaking down
Speaking of the US dollar correlation, I believe that it is breaking down at the moment. Quite often, if the US dollar loses value, commodities will rise. While that is true in some markets, the oil markets have certainly not shown this. This is because people were beginning to wonder about demand. The employment numbers in the United States truly weren't that strong during the session on Tuesday, and then shows that perhaps industry will not be demanding as much energy, adding to concerns is the fact that the natural gas numbers were much higher than anticipated, meaning that less natural gas is being burnt, which suggests that energy markets in general could run into a bit of trouble. Again, I will be shorting this market on short time frames, taking little bits and pieces out of the market as we go along.