WTI Crude Oil Forecast: Market Stabilizes After Big Selloff

Christopher Lewis

Crude oil markets are also going to have to try to price in whether or not there is going to be increased demand, something that I think should continue to be the case as long as we have the reopening trade in vogue.

The West Texas Intermediate Crude Oil market rallied significantly on Monday after selling off quite horrifically on Friday. We are currently looking at the 200-day EMA as support, and although we gave back about half the gains from the early part of the session, the reality is that the market continues to look underneath for stability, especially as the selloff was on Friday, a day that had a serious lack of liquidity.

When you look at the new version of the coronavirus, it seems to be a milder version, so I think there is recovery getting ready to be priced into this market. That being said, I would wait until we break above the highs of the Monday session to get bullish, but at that point in time I think we would probably recover. The 50-day EMA is currently at the top of the candlestick for the massive selloff on Friday, so that could offer a little bit of resistance. Having said that, if we do break above there, then the market is likely to go looking towards the $85 level. Furthermore, you should also keep in mind that the crude oil markets are also going to have to try to price in whether or not there is going to be increased demand, something that I think should continue to be the case as long as we have the reopening trade in vogue. Otherwise, then we could go looking towards the bottom of the Friday candlestick, and breaking below there could be a very negative turn of events.

Crude oil also is being threatened by the release of more oil from the Strategic Petroleum Reserve, but that is a short-term influence on the market and would almost certainly anger OPEC enough to make them slow down production increases, if the behavior of Russia is any sign. I do think that crude oil is going to be paying close attention to this uptrend line just below, so that should be focused on as well. If we break down below that uptrend line, then we could go looking towards $62.50 initially. That would also be a very negative look for the market, so I do not know at that point in time exactly where I would get involved again to the upside.

WTI 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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