The WTI Crude Oil markets rose during the session initially on Wednesday, but as you can see the area above the $101 level was a bit too resistive, and therefore push the market back down. By pushing the market down in the manner that it did, we ended up seeing a shooting star for the session, which of course is a very negative sign. However, the biggest problem that I see with that is the fact that the previous candles for the Monday and Tuesday both formed hammers. Because of this, I don’t believe that the markets going to be able to break down much, and therefore waiting for supportive candles at lower levels is essentially what I am doing.
Down below, the $98 level looks to be an area that we could see supportive action, so the right candle down there would be enough of a reason to start buying as well. However, there is the possibility of the market going higher than the top of the shooting star from the Wednesday session, and that of course would be a very bullish signal as the market should continue to go much higher at that point in time.
Expect choppy conditions
Because of the hammers and the shooting star presenting themselves so close to each other, I think that this market will continue to be choppy regardless what happens. Because of this, you may find yourself being much more comfortable in the CFD markets, or perhaps the options market, where you can at least define your risk or limit it without jumping into the futures market, which of course is an expensive contract to be involved in.
Ultimately, I do think this market goes higher, but dealing with the volatility between here and there could be rather difficult thing to do. With that, I am a buyer and not a seller, it just comes down to whether or not I would be buying above the shooting star, or perhaps a little bit closer to the $98 level. As far selling is concerned, I don’t think he can be done until we clear the $95 level on a daily close.