The WTI Crude Oil markets fell during the session on Wednesday, finding support at the $96 level. The resulting bounce formed a nice hammer for the day, and this of course is very supportive looking candle all of a sudden. That being the case, I think that a break of the high from the session on Wednesday should send this market higher, possibly to the $100 level without too many issues. After all, I think this market has fallen a bit too far, too fast.
On top of that, there is quite a bit of noise below, and as a result I would be a bit hesitant to short this market into this noise anyways. In fact, I see so much noise between here and $92 that I am very hesitant to short at all anymore. If there is a place that we are going to find support, it will be in this general region.
Hammers are one of my favorite trading signals, and the fact that we are sitting right on top of a cluster of support suggests to me that there could be a longer-term trade getting ready to set up. Granted, you have to have the wherewithal to hang onto the trade that's going to be extraordinarily choppy, and without a doubt countertrend to the last couple of weeks, but in the end this is exactly the type of set up that produces the most profit. That being the case, I think that it's worth taking a chance, simply because of all the noise going all the way down to the $92 handle.
I think the $100 will cause a bit of resistance, as will the $101 level. If we can get above there, I think we could see a move all the way up to $104 where we would run into significant resistance. It'll be interesting to see how this plays out, but if the US dollar takes it on the chin again, we could see oil prices rise for that reason alone as over the longer term the two do tend to run the complete inverse of each other.