The WTI Crude Oil markets fell during the course of the day on Monday, breaking to a fresh, new low. Because of this, it’s more than likely that we will continue to go lower, probably aiming for the $92.00 level first which I see as a significant support level on the longer-term chart. Below there, I see the $90.00 level as well, being a large, round, psychologically significant number. I think that a lot of buyers will be down there waiting for the market based upon perceived value.
A supportive candle somewhere in this region would be a decent buying opportunity in my opinion simply because the risk to reward ratio would be so great. With that, I would be a buyer and aiming for probably the $97.00 level, as it was once a significant support level. That being the case, it makes sense that it would now be a significant resistance barrier, with perhaps a little bit of resistance at the $95.00 handle as well, based upon the fact that it is a large number.
Oversold conditions.
I believe that the market is certainly in oversold conditions, as the market has dropped from the $107 level to the $94 region in just a matter of six weeks or so. This is especially interesting considering that we are in the dead of summer, a time that is traditionally fairly quiet. In fact, all one has to do is look at the Forex markets to see how little volatility there is at the moment in several trading instruments, and realize that this move has in fact been rather significant.
With that, I believe that there is still the opportunity for a bounce based upon that alone, not the mission the fact that sooner or later people do start to look at perceived value. It will certainly be difficult trade to take, but I will be watching for supportive candles, especially a longer time frames in order to get involved to the upside again. Selling is more of a short-term trade, simply because you have missed so much of the move in my opinion.
