- The crude oil markets have seen a bit of a rebound during Monday's trading session, as they recover from the massive plunge in recent weeks.
- The West Texas Intermediate (WTI) Crude Oil market has been particularly volatile, but it seems to be finding a summer range with a floor at the $65 level.
- This means that we can expect to see a lot of back-and-forth in the market, but it's likely that the market will continue to recover.
Above the $65 level, the 50-Day EMA is situated around the $76 level, and this could offer some resistance. Traders should look for signs of exhaustion around this level, as it could provide shorting opportunities. If the market manages to break above this level, then the 200-Day EMA at the $81 level becomes the next resistance point. The $82 level is the top of the overall range that the market is trying to form.
Similarly, the Brent crude oil market has seen a recovery, but the 50-Day EMA is sitting above, near the $80.50 level, and the 200-Day EMA marks the top of the overall range. It's unlikely that we'll see the market break above the $86 level anytime soon, especially with the current global economic slowdown. If we see the market break down below the $70 level, that could result in a huge flush lower, but this is likely to be the bottom of the overall range for the summer.
Traders Should Remain Vigilant
For traders, it's important to look for signs of exhaustion during rallies in the market. The easiest trade has been shorting oil over the last several months, and it's likely to continue to be the case. While the market is recovering, it's also very noisy, and traders should be cautious with their position sizing. Furthermore, pay close attention to global growth prospects, as there are a lot of concerns as to what is coming by the end of the year. Oil tends to predict global economic health, as it is the “life’s blood” of modern economies.
Overall, the crude oil markets are in a state of flux as they try to find a summer range. The recovery is promising, but there are still a lot of uncertainties, such as the global economic slowdown, that could affect the markets. Traders should remain vigilant and look for opportunities to capitalize on the market's volatility.
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