WTI Crude Oil Forecast: Market Breaks Out

I do believe that it is only a matter of time before we not only reach $90, but we may reach much higher levels than that as well.

The West Texas Intermediate Crude Oil market gapped higher to kick off the trading session on Wednesday but then turned around to fill the gap. At that point in time, the $85 level came into the picture and offered quite a bit of support. Keep in mind that there are both technical and fundamental reasons why this market is going higher. To begin with, we had the drone strike in the United Arab Emirates, but we also have had a pipeline break down in Iraq. In other words, in a market that was already struggling to keep up with production.

At this point, the market is likely to see more upward pressure, but eventually we will see some type of pullback. That pullback will almost certainly end up being a buying opportunity unless we see some type of major fundamental change in what is going on. It looks as if the coronavirus is starting to end up in the rearview mirror, as several economies around the world are starting to switch from the idea of a pandemic to an endemic. If that is going to be the case and has been much less dangerous than worried about, coronavirus may just simply be something that the world lives with at this point.

The market is a bit stretched, so I would love to see a pullback to at least the $85 level, which was the previous resistance and high. If we break down below there, then I would anticipate the $82.50 level and the $80 level both to offer a significant amount of support. I would not chase this trade here, although it clearly could go higher based upon the fact that we are trying to reach towards the highs of the day in order to close the market. The $90 level above would be a bit of a target for longer-term traders, or for that matter short-term traders if we continue to see this parabolic run. Either way, I learned a long time ago that you cannot chase the trade, you are much better off finding an opportunity based upon value than anything else. At this point, value means the same thing as some type of pullback in a market that has run away. I do believe that it is only a matter of time before we not only reach $90, but we may reach much higher levels than that as well.

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.