WTI Crude Oil Forecast: Finding Support Again

Christopher Lewis

The West Texas Intermediate Crude Oil market initially fell during the course of the trading session to find support near the $71 level. We have bounced significantly from there to form a bit of a hammer, and that hammer of course is a very bullish sign. We had recently seen a lot of noise coming out of the OPEC+ meeting, and of course lots of conversations between the United Arab Emirates and the rest of the members. The UAE is talking about flooding the market with supply, but there is a significant amount of demand out there that people will be looking into.

To the downside, the 50 day EMA is sitting near the $69 level, and starting to rise again, signifying that perhaps the trend still has further to go. Beyond that, with economies reopening around the world it does make a certain amount of sense that crude oil demand will pick up. However, we have seen Tokyo and Australia both lock themselves down, so there is a certain amount of fear that perhaps the Delta variant will continue to be a major issue and perhaps shut things down as well. All things being equal, the market is likely to continue being noisy, but despite the fact that we had seen such a massive selloff as of late, we are still very much in an uptrend and that is one of the first things that you should think about.

I believe that the “floor the market” is near the $67.50 level, which was the top of the ascending triangle that we recently broken out of. The market continues to see a lot of interest in that area due to the “market memory” that would come into that play, so with that I think the trend comes into play. If we break down below there, the market is likely to continue seeing even more selling pressure, but I think that would take some type of major “risk off event” to make that happen. If we can break above the highs of the Tuesday session, then I think oil is free to go looking towards the $80 level above which is a large, round, psychologically significant figure. At that point, there is probably going to be a lot of headline noise, but I do think that we at least make an attempt to get there.

Crude oil

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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