The West Texas Intermediate Crude Oil market has acted a bit sluggish during the trading session on Thursday, but quite frankly that is not a huge surprise considering just how parabolic we have been as of late. That being said, the market is sitting just below the $82.50 level, and probably keeping a close eye on that $85 level above, an area that had been resistance and of course is a large, round, psychologically “midcentury” level.
I anticipate that this market is probably going to pull back a bit, but at the end of the day I do not think this is a selling opportunity. Rather, I believe that this is a market that needs to pullback in order to find a bit of value, and perhaps even more importantly, momentum. That momentum is something that is needed to be replenished, due to the fact that we had shot straight up in the air, and I do think that we need to find a little bit of momentum and buyers to come in and try to push things higher. Ultimately, this is a market that I think will challenge that $85 level, but we need to see a little bit of value to get people involved.
On a pullback, I believe that the $80 level should be rather supportive, as it is a large, round, psychologically significant figure and a lot of people will be paying attention to it. Below there, we have the bottom of the candlestick from the Tuesday session which is at the $78.43 level. If we were to break down below there, then the market is likely to go looking towards the 50 day EMA which is starting to curl higher, and I think it is probably only a matter of time before buyers would get involved.
I do think that we probably need to take a bit of a breather in order to attract more buyers, but there is no way I would be short of this market. It is obviously very strong, and therefore I think that shorting is probably something that we are going to need to see some type of massive change in the outlook to make that a possibility. If we do turn around and go higher, it is not until we break out above the highs that I would be a buyer just due to the fact that we are so overbought.
