The WTI Crude Oil markets fell during the majority of the session on Thursday, but as you can see the $92.50 level offered enough support to push this market up and form a hammer. Is because of this I believe that we are trying to form some type of base in this market, but you have to keep in mind that has been sold off so drastically, that it is going to take something special to make this market turn around for any significant length of time.
Because of this, I think that a break of the top of the hammer isn't necessarily a buy signal, and I believe we need to clear the $95.50 level in order to feel reasonably safe to do so. If we clear that area, I believe that the next target will be the $98.50 level, which is as far as I can tell significantly resistant. That resistance area will more than likely repel buyers, but even if we get there, and clear it, I still think the markets going to struggle to get above $101. Of course, that is a fairly significant move higher, so it would of course be worth being involved in.
US dollar and the Federal Reserve
Keep an eye on the employment numbers, because they are going to be what the Federal Reserve uses in order to decide what to do about tapering off of quantitative easing. This will have a great effect on what happens with the US dollar, which of course has a great effect on what happens with the oil markets in general. With that being the case, I feel that this market will have a little bit of an upside move, but eventually we will have a nice selling opportunity at higher levels.
The more aggressive trader could try to take the upside from here, but myself I am more willing to take a selling opportunity at higher levels as I do believe that the downtrend should stay intact somewhat for a while. I'm not looking for any type of meltdown, rather continued weakness.
