Crude Oil Price- Oct. 2, 2013

The WTI Crude Oil markets fell during the session on Tuesday, testing the $101 level again. This is the third hammer like candle in a row that we've seen, and as a result it is becoming more and more apparent that this level is acting as massive support. With that being the case, I feel that this market will continue to test this area, but I have a hard time believing that we are going to break down through the supportive zone. I use the word zone simply because I believe the market will fall all the way down to $100 before breaking free to the downside. With that in mind, I actually believe that this market could get bullish fairly soon.

The value the US dollar will certainly have a great effect on this market, and that being the case we should see an inverse correlation between certain currency pairs and the WTI market. The US dollar of course is what the commodity is priced in, so it makes sense that it has a negative effect on the price of the commodity as the value of the Dollar continues to rise. And of course, the exact opposite if it continues to fall.

Friday's nonfarm payroll numbers will be crucial for this market.

If not the most obvious correlation, but the nonfarm payroll numbers that are coming out on Friday will have a massive effect on this market. That's mainly because it measures the employment situation in the United States, which of course is directly affected by economic expansion. The more economic activity there is, the more likely we are to see the crude oil markets be stretched by demand.

Also, you have to keep in mind that traders will be looking at the nonfarm payroll number as a potential indicator as to whether or not the Federal Reserve is close to tapering off of quantitative easing. It has been stated by several of the board members that they are concerned about the employment numbers, and until those get better it's very unlikely that the Federal Reserve will be comfortable tapering, which could weaken the value the US dollar, pushing the price of oil higher. With this in mind, I do not expect a lot of action between now and the end of the week.

Crude oil 10213

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.