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Crude Oil Price- April 2, 2014

The WTI Crude Oil markets fell during the session on Tuesday, breaking well below the $100 level by the end of the day. However, I see a significant amount of support below, especially around the $99 level, as I see that there is a large amount of clustering just a short couple of weeks ago. With that in mind, I think that even though the market sold off rather drastically, it probably has a bit of a battle on its hands if it wants to go lower. With that in mind, I find it very difficult to short this market right now.

There were weak manufacturing numbers coming out of China, and that of course has people concerned about whether or not there would be significant demand for crude oil as manufacturing slows down. The fact that the Chinese numbers are weaker than expected suggests that the world itself is possibly slowing down, which of course would have drastic effects on consumption.

Plenty of support below, was there an overreaction during Tuesday’s trading?

One has to wonder whether or not there was a significant overreaction during the trading hours on Tuesday. This is because we essentially fell apart, but as you can see as we approached the massive support level below, the market simply stopped. The shows that there’s no real conviction, and it’s probably more or less a knee-jerk reaction to negative news that is a bit overdone at the end of the day.

Looking forward, I would anticipate some type of supportive candle just below current levels, and that is enough for me to start going long of this market again. I believe that the market would head back towards the $102 level without too many issues, and eventually trying to get to the $103 level, which of course is a resistant level as well. Above the $103 level, I believe the market then attempts to get to the $105 level, where it should face a significant amount of resistance. As far selling is concerned, we need to get below the $97 level in order to consider doing so in my opinion.

Crude Oil 4214

Christopher Lewis
About 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.


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