WTI Crude Oil Forecast: Testing Resistance

The West Texas Intermediate Crude Oil market has pulled back just a bit during the trading session on Thursday, as the US dollar picked up a bit of strength. As we are now getting ready to get some type of statement on Federal Reserve policy over the next 24 hours coming out of Jackson Hole, a lot of traders will be paying close attention as to whether or not money is going to tighten. With several Federal Reserve Gov.’s giving hawkish statements during the day, it has put a bit of a dent in the risk appetite of traders.

As you can see, I have the Bollinger Bands on top of the chart, something that I do not typically pay close attention to, but it is worth noting that the 20 SMA has just cross below the 50 day EMA, and we are sitting in the middle of the Bollinger Bands and looking very much like we are ready to continue chopping lower. It is worth noting that the $65 level underneath could be support, so that will be my next area of interest. Breaking down below that then opens up the possibility of a move down to the lows again, which is at the 200 day EMA, where we had bounced from so significantly on Monday. Granted, the pullback that we have seen so far has paled in comparison to the massive move higher, but the US dollar seem to be driving everything at the moment.

On the other hand, if we were to turn around a break above the $70 level, then it is likely that we could go looking towards the $74 level, which is essentially the top of the Bollinger Bands indicator and could bring in a little bit of an oversold pullback. The global demand for crude oil of course continues to be a fluid situation, because the Delta variant is something that is starting to take a lot of headlines. Ultimately, if we do see more lockdowns as the infection rate of the coronavirus seems to be picking back up, that could drive down the demand for crude oil. As things stand right now, it looks like it is trying to recover but at the very least I think we probably see a little bit of a short-term pullback as we had gotten a bit ahead of ourselves.