WTI Crude Oil
The WTI Crude Oil market fell significantly during the trading session on Tuesday after gapping lower, breaking below the major uptrend line. However, we have bounced a bit from the $65 area, showing signs of life again. If you been following me here it Daily Forex, you know that I thought that we need to break down below the $65 level to have the “all clear” for a major selloff. I think the next couple of days will be crucial as to the future direction. If we can break above the highs from earlier this week, then it’s likely that we could go to the $70 level. However, if we break down below the $65 level, then it’s likely that we continue to go lower, perhaps to the $62.50 level. Ultimately, this is a market that is testing a major support level, and even though we pierced that level, by the end of the day it looks like the buyers are quite ready to give up.
Natural Gas
Natural gas markets continue to be very volatile, and initially rallying during the day on Tuesday, but rolled over and sold off rather hard. That of course is not a good sign, and I think it is simply a market that is trying to find a reason to break down. It looks as if the winter in the United States may be warmer than originally anticipated, and that of course is very bearish overall as we have quite a bit of supply in the United States which of course can continue to fulfill most demand. If we don’t have enough demand to burn through the supply, natural gas will break down below the $3.10 level and then reenter the previous consolidation area, perhaps opening the door to the three dollars handle.
