- Crude oil market traders have seen a lot of negative action during the training session on Thursday, as we have seen the markets breakthrough major support.
- At this point, looks like we are trying to price in a major recession, and energy is all but left dead at this point.
- However, it’s also worth noting that the situation in the Middle East does come into play at times, and if we see some type of escalation, you could probably see crude oil shoot straight up in the air.
With that being the case, I think that you need to be very cautious trading the crude oil market, and I think more or less this market has become a symbol of the impending recession that is almost certainly coming. Because of this, you need to be very cautious and recognize that crude oil might not be the place to be. Having said that, we are starting to head toward a major congestion area between $68 and $72.50, so caution is probably the better part of valor.
I Will be Paying Close Attention to the Market
Brent markets of course are no different, as they will run on the same fundamentals. Ultimately, this is a market that looks like it’s in serious trouble, and it could run all the way down to the $72 level. While I don’t want to chase the trade now, I will be paying close attention to crude oil, because it could give us a little bit of a “heads up” as to the economic scenario globally. It’s kind of ironic, because I’ve been watching recessionary numbers come out all over the world, but it seems like just now the market is starting to pay attention to it. Perhaps they are starting to understand that the Federal Reserve is not going to change its tune, but as we all know, it is only a matter time before traders out there start pushing the idea of buying “risk assets”, because that’s what most financial media pundits do, they sell you things that they no longer want to own.
$80 above should be resistance, but at this point in time it’s probably best just to step to the side and let the market collapse, perhaps looking for value at extremely low levels on some type of nice swing trade. After all, it would only take one errant headline coming out of the Middle East to turn things around completely. This is not a market for amateurs.
Ready to trade WTI Crude Oil FX? We’ve shortlisted the best Forex Oil trading brokers in the industry for you.