The WTI Crude Oil markets rose during the course of the day on Friday, bouncing all the way back above the $95.00 level. Because of this, it appears that the market could very easily bounce a little farther, perhaps heading to the $96.50 level. With that, we feel that the market will run into a significant amount of resistance in that area though, as it was so supportive in the past and the breakdown through there was very significant and massive.
The fact that we closed at the very low of that bearish candle on Thursday suggests to us that there will be a continuation of the downward pressure. With that being the case, it makes sense that we would get a little bit of a bounce, followed by a resistant candle. Because of that, I am willing to sell this market somewhere closer to the $96.50 handle, and on the first signs of a failure.
“What was once the floor becomes the ceiling and vice versa.”
One of the old adage is in the technical analysis field is “what was once the floor becomes the ceiling and vice versa.” That is because of that I think that we need to test the $96.50 level for resistance, and of course doing so gives the opportunity to sell this market at an area that obviously has a lot of bearish pressure in it. Because of that, I have no interest in buying this market until we not only break above the $96.50 handle, but get above the consolidation area at that level which extends to the $98.50 handle. With that being the case, I really don’t have an interest in buying this market quite now.
Ultimately, I believe that the market will more than likely head back down and aim for the $90.00 level given enough time. I think at that point in time though, we will have sold off as much of possible, and as a result we should see buyers step back in the marketplace near that level, which not only show support, but is also a large, round, psychologically significant area.