- The West Texas Intermediate Crude Oil market rallied a bit during the trading session on Tuesday as we had broken toward the $89 level.
- However, we still do not have the momentum to send this market out of this area, as we continue to go back and forth with the question of whether supply or demand is going to be the thing that people are paying the most attention to.
The 200-Day EMA is somewhere near the $92 level, so we can break above there it’s likely we could reach the $95 level in that case. Breaking above the area, then we could go looking to the $100 level. The $100 level obviously has a huge psychological influence in it, so it would be a huge fight just waiting to happen. Breaking above the $100 level would kick off a much bigger move to the upside, perhaps allowing oil to go to the $120 level.
Noise Ahead
On the downside, if we were to break down below the $84 level, I think it opens a move down to the $82.50 level. After that, then you have the $80 level. All things being equal, we should see plenty of support in that area, but it also makes quite a bit of sense that we would see buyers appear. However, if we were to break down below there, then we could drop down to the $75 level. The $75 level being broken would send this market much lower.
Keep in mind that the market is trying to figure out whether we are going to focus on a lack of supply, or if we are going to focus on lack of demand. Lack of demand is a very real possibility, as it looks like we are ready to test whether that theory holds. Ultimately, I think the one thing that you can probably count on is a lot of noisy behavior, so there’s no real need to fight the range that we are in right now. As things stand, I suspect this range holds until we get some type of clear-cut signal. Once we do, we could see a move of about $20 in either direction, but the key here is going to be keeping your position size reasonable due to all the volatility.
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