At this point, it looks like we are trying everything we can to break out, which for me would be a move above the $73 level.
The West Texas Intermediate Crude Oil market rallied a bit during the course of the trading session on Thursday, initially gapping higher and then shooting straight towards the $72.60 level. At this point, it looks like we are trying everything we can to break out, which for me would be a move above the $73 level. If we get a daily close above that level, then I anticipate that we will not only go looking towards the $75 level, but perhaps all the way to the top of the major breakdown candle which is at $78.30.
Keep in mind the crude oil is a bit of a mess right now, because we have the International Energy Agency saying the other day that the markets have gone from “undersupplied” to “oversupplied.” At the same time, OPEC has released its forecasts for crude oil demand, stating specifically that omicron would probably have little in the way of demand destruction attached to it. Because of this, there has been a lot of noise of the last couple of days, and now we need to focus on longer-term fundamentals. However, it is not that simple as we are at the end of the year, and it is more likely than not we will see a lack of liquidity become an issue.
As things stand currently, I believe that the $73 level offers a significant amount of resistance and breaking above that would be a very bullish sign. I think that would be a signal to start buying, just as a break down below the 200 day EMA underneath, which is currently sitting at the $69.32 level would be a selling signal. Between now and the end of the year, things will be very choppy and quite frankly it would not be overly surprising to see the market simply go back and forth in the consolidation area that we are already in. If that happens, it would just be a typical quiet last two weeks of the year, opening up the possibility of a lot of sideways choppy range bound trading, which should be approached with small position size is as a sudden large order could spike the market in one direction or the other, causing havoc momentarily. This will be more of a danger later in the month, but it is something you need to keep in the back of your mind.