Do not expect this market to be easily shaken, because it has had plenty of opportunities to start selling off recently.
The West Texas Intermediate Crude Oil market has rallied again during the trading session on Wednesday, but continues to struggle with the idea of breaking out to the upside. The $43 level above is massive resistance, and as the inventory numbers came out less than ideal, the idea of crude oil rallying significantly from here is a bit of a stretch. Many traders are focusing on the possibility of the vaccine opening up the economy. Because of this, there are people out there willing to buy energy based on a possible stronger future.
There was a huge oversupply of crude oil before the coronavirus hit, so we will continue to see a bit of a ceiling on this market. That's why I do not trust rallies, even though it has been rather strong over the last several weeks. The $43 level seems to be a massive amount of supply, so it will be interesting to see if we can continue to go higher. If we cannot, and especially if we break down below the $40 level, then we will see a push to the downside, perhaps down to the $35 level. That is an area in which we have seen buyers previously, so I would not be surprised to see a bit of a bounce from there.
However, if we were to break down below there, it is likely that the market could drop all the way down to the $30 level, perhaps even opening up a move down to the $25 level. I do not expect this market to be easily shaken, because it has had plenty of opportunities to start selling off recently. What we are looking at here is the possibility of a move into the market by simply shortening signs of short-term exhaustion. We will continue to see a lot of choppy behavior, but we are clearly struggling to go higher. If we do break out, then the market would probably go looking towards the $50 level, but we are not quite there yet.