The WTI Crude Oil market fell significantly during the course of the session on Thursday, breaking down below the $42.50 level. This area was the most recent low in this market until Thursday, and now that we have made a “lower low”, it makes sense that we should continue to go even lower. At this point in time, if we break down below the bottom of the range for the session on Thursday, I believe this market will reach towards the $40 level, and then eventually the lows of the $38 level. Any type of rally at this point in time should be a nice selling opportunity, once we see short-term resistive candles.
I also recognize that the $44 level was previous support, and it should now be resistance. Any exhaustive candle near that area should be a selling opportunity, as I believe that the sellers are most certainly in control right now. However, this is a market that will more than likely be choppy so therefore it is probably better to simply sell the rallies that it will be to hang onto a short position.
US Dollar Strength
The US dollar continues to be one of the strongest currencies in the Forex world right now, and that of course works against the value of commodities in general as they are priced in that currency. I don’t see that changing anytime soon when I look at the US Dollar Index, so I believe that oil will continue to suffer. I also feel the same way about precious metals and grains as well.
With that being the case, I have no scenario in which I am willing to buy this market, unless of course we get some type of longer-term buy-and-hold signal, but that of course would have to be on at least the weekly chart, and unlikely at this point in time as it appears that the sellers have taken control yet again.
