Crude oil markets observed a decline in Wednesday's trading session, as the overarching concerns about the state of the economy persist.
The West Texas Intermediate Crude Oil market encountered some initial struggles during the early hours of Wednesday, as efforts were made to validate the presence of a shooting star pattern from the prior session. In essence, the market still maintains substantial support in the vicinity of the $75 region, and this area is likely to draw significant attention if and when we approach it. Consequently, we can anticipate heightened volatility in this zone, raising the pivotal question of whether buyers will step in to seize the opportunity of acquiring "inexpensive oil."
Should we succeed in surpassing the upper boundary of the aforementioned shooting star pattern, the market's trajectory may lead us toward the 200-Day Exponential Moving Average. Such a scenario appears increasingly plausible, given the ongoing uncertainties surrounding the economy. There are lingering doubts as to whether the economy is undergoing a slowdown or experiencing an uptick in inflation, particularly in light of the Producer Price Index (PPI) figures contradicting the Consumer Price Index (CPI) data from the prior session.
Traders Should Be Cautious With Position Sizing
- Brent markets also faced a decline during Wednesday's trading session, following the formation of a shooting star pattern the previous day. It is important to note that Brent tends to follow the overall sentiment of the WTI grade, as the crude oil landscape remains rather convoluted.
- The $80 level below is expected to offer robust support, making it likely for the market to attract buyers in that general vicinity. In the event of a rally at this juncture, there will be considerable obstacles to overcome on the path higher, but the possibility of reaching the 200-Day EMA remains plausible.
- Conversely, a breach below the $79 level could potentially trigger a more substantial downward move, signaling a significant economic downturn.
Currently, it appears that each market is striving to factor in a different reality, while equities continue to reflect the notion of "cheap and easy money" persisting indefinitely. Crude oil, on the other hand, is attempting to grapple with a rather grim economic outlook. Bond markets do not appear particularly enthused, and precious metals exhibit erratic behavior. In navigating these tumultuous waters, it is advisable to maintain a reasonable position size and exercise caution. At the end of the day, it’s all you can do.
Ready to trade WTI Crude Oil FX? We’ve shortlisted the best Forex Oil trading brokers in the industry for you.