The WTI Crude Oil market absolutely collapsed during the session on Thursday, breaking well below the $96.50 level. With that, it shows that the market has broken below significant support, and as a result I think that the oil markets are about to fall apart. The fact that we closed below the $94.00 level tells me that we should continue to go much lower, probably heading down to the $90.00 level, which is the next major support area on the longer-term charts.
Anytime this market rallies at this point in time, I believe that it’s a selling opportunity on the short-term charts. The market will more than likely try to bounce from here, but the numbers for oil inventories an economic activity simply do not support strong oil prices. With that, I believe that selling rallies will continue to be the best way to trade this market because whenever you see some type of massive breaking the market down like this, there will be a violent reaction in the opposite direction. Those are normally short-term and temporary in nature.
The trend is set, and there can be no doubt now
The trend is set obviously, considering how bearish it’s been recently. There can be no doubt now that this is a negative bias to this market, and now we are in danger of seen some type of free-for-all to the downside. As the market breaks down from here, it’s likely that we will see some type of capitulation, which is quite often the norm in these type of market. Once we get that capitulation, it’s possible that we can turn around and start buying at that point, but right now there’s absolutely no way that I’m willing to step into this market and catch the falling knife
The closing of the market at the very lows of the session suggests that we certainly have momentum going into today’s session, so really at this point in time I cannot think of a possible way to start buying.
