WTI Crude Oil Forecast: Continues the Same Choppy Behavior

 I don’t expect to see a major meltdown, but then again, I don’t expect to see oil take off to the upside easily either.

The West Texas Intermediate Crude Oil market drifted a bit lower during the trading session on Monday but did bounce from the ultimate lows. It looks as if it is still trying to pay attention to that neckline from the inverted head and shoulders, as that’s essentially where we bounced from. We also have the 50-Day EMA in the same neighborhood, though a lot of things going on at the same time.

When you look at the oil charts, you should also keep in mind that this is a bet on where the global economy may or may not be going. The market participants will continue to have to digest a lot of noise, from a lack of overall growth to the fact that there’s a lot of inflation in central banks around the world will continue to do what they can to fight it. That being the case, if they do continue to tighten monetary policy, they could continue to squeeze the idea of growth, which would greatly impact the way that oil behaves. After all, oil is the “lifeblood” of economic activity.

Keep your Position Size Reasonable

  • With that being the case, we would probably see economic activity dropping as negative for this market, but it might not necessarily be a complete meltdown, because the Biden administration used the Strategic Petroleum Reserve in the United States to buy votes before the last midterms and will have to replenish it sooner or later.
  • In other words, the United States government probably will provide a little bit of a floor in the market, but that doesn’t mean we can drop.
  • The $75 level underneath should be a significant support level, just as the $81.50 level above should be a significant resistance barrier.

In the meantime, I think this is more or less going to be back and forth walking along the 50-Day EMA, but perhaps pulling back just a bit. I don’t expect to see a major meltdown, but then again, I don’t expect to see oil take off to the upside easily either. Short-term range-bound traders will probably love this market over the next several days as it tries to figure out where it wants to go. Keep your position size reasonable, because it’s easy to get chopped up in this type of environment.

WTI Crude Oil

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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.