The West Texas Intermediate Crude Oil market fell rather hard during the trading session on Thursday, perhaps in response to the US dollar spiking in value initially. However, later in the day we started to see the greenback lose some of its strength, and by extension the oil market did bounce quite nicely. The 50 day EMA sitting just below the lows of the day seems to have offered a reasonable amount of support, and it is likely that we will continue to see more of the same type of action that has been a mainstay of this market. With that being the case, I think it is only a matter of time before the market participants continue to try to find value on these dips.
The 50 day EMA offering support is something that we have seen before, and quite frankly the 50 day EMA is widely followed. If we were to break down below it, then it could open up a move to the $35 level, but it does not look like we are ready to do that yet. In fact, by the end of the day it looks like we are ready to go right back into the previous range. If that is going to be the case, then we go right back into a scalping type of environment.
A break above the highs of the day could send this market looking towards the $49 level though, and the fact that we had been so resilient during the trading session does in fact suggest that could very well happen. Alternately, if we were to break down below the lows from the session, we could see the oil markets drop down a bit, and perhaps unwind quite drastically. It will be interesting to see how Friday closes the week out, because so far not much has truly happened, despite the fact that we had quite a bit of volatility on Thursday. This shows just how much the US dollar falling has propped up this market in general, so pay attention to that as well. In general, it looks like we are still trying to figure out directionality when it comes to this market, as there are a lot of concerns about demand, but at the same time there has been strong compliance with production cuts and of course the falling US dollar has also created a bit of upward pressure.