- The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Tuesday, after showing signs of life at the $76.50 area, an area that has offered support over the last couple of days.
- At this point, it looks like the market may be trying to set up for some type of double bottom, but that might be a bit ambitious as the demand concerns out there continue to outweigh supply issues.
Keep in mind the crude oil is the “lifeblood” of the global economy, so if the global economy slows down it stands to reason that there will be a lot less demand. In that scenario and makes sense that price drops. If the market were to break down below the bottom of the hammer for the trading session on Monday, that could open the possibility of a move much lower, perhaps even a move below the $75 level.
Choppiness Ahead
I think a lot of the easy money to be made shorting crude oil has already happened, so therefore I don’t think this is a situation where we simply fall apart. On the other hand, if we turn around a break above the $80 level, it’s possible that we could go to the $82 level after that, which would be a small barrier. After that, then we could be looking at a move to the 50-Day EMA, which is right around $85 level. I don’t think this is a situation where we see a lot of momentum will be captured to the upside, but I also look at rallies as an opportunity to start shorting oil as will most certainly are heading into a global recession.
I don’t think that we are going to fall apart, I think it’s just more or less going to be a “fade the rally” type of market, and it will probably continue to be very choppy in general. Ultimately, this is a situation where there is no real clarity for bigger moves, and I do think that we continue to see a lot of choppiness going forward. After all, we have fallen apart from the highs, but don’t really have any reason to turn around and start sending this market higher either. The US dollar falling could support oil to a point, but that’s just a small part of the equation.
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