We have been all over the place recently, so do not be surprised at all to see this market chop around in what I would think of as a bit of confusion.
The West Texas Intermediate Crude Oil market had a very noisy trading session Tuesday as we reached below to test the 50-day EMA. That being said, the market ended up forming a very neutral candlestick, showing just how much indecision there is at the moment. Ultimately, I think what we are seeing here is a scenario in which the markets are trying to determine whether or not the uptrend can continue.
We did recently break above a downtrend line, and that in and of itself is a rather bullish sign. I think the market is likely to continue finding plenty of interest, so I like the idea of paying close attention to this neutral candlestick. If we can break above the top of it, that would be very bullish and it should send this market higher, perhaps looking towards the $74 level at first, followed by the recent highs near $77.50. However, if we were to turn around and break down below the 50-day EMA, then we need to keep an eye on the $67.50 level, as it is an area where we have seen a lot of support.
Breaking below that support opens up a floodgate of selling pressure, which could send this market towards the 200-day EMA which presently sits at roughly $63. The 200-day EMA is an indicator that a lot of people pay close attention to, so that is most certainly worth noting in that general vicinity. If we were to break down below it, it would be a very negative turn of events for the crude oil markets to say the least.
To the upside, if we could make a fresh, new high, then it is likely that the market will eventually go looking towards $80 level, but obviously a lot of this comes down to perception as to what demand will be in this post-pandemic world. We have been all over the place recently, so do not be surprised at all to see this market chop around in what I would think of as a bit of confusion. This candlestick certainly signifies that, but ultimately, we are still in an uptrend so you have to favor a breakout to the upside before it is all said and done.