- The West Texas Intermediate Crude Oil market initiated a minor pullback during the early trading hours on Tuesday. However, it is crucial to note that ample support exists in the backdrop, rendering any dips a potential buying opportunity.
- In fact, we have seen a recovery since the CPI numbers were released in the US. The market appears poised to continue its recovery from the substantial decline it experienced recently.
- Notably, it tumbled to the $75 level, a pivotal juncture characterized by its significance as a large, round, and psychologically impactful figure.
Currently, the prevailing sentiment suggests that the market is inclined to gravitate towards the 200-Day Exponential Moving Average (EMA), a pivotal indicator that garners considerable attention from market participants. Positioned at approximately the $81 level, this area has previously held significance on multiple occasions. The $80 region also looms as a formidable resistance zone. Nonetheless, as long as the market remains above the $75 level, it is reasonable to anticipate a degree of short-term optimism.
In a similar development, the Brent markets experienced a small retracement during Tuesday's trading session. It is plausible that the recent bounce in the short-term rally was somewhat overdone, but the markets turned around after the CPI numbers suggested that inflation may be slowing in the US. Currently, traders may be eyeing the 200-Day EMA, which sits near the $85 level. However, this level is anticipated to function as a persistent hurdle, potentially contributing to the establishment of a consolidation phase. Presently, the market appears to be in the process of delineating a consolidation area, driven by the ongoing assessment of two pivotal factors: the possibility of a looming economic recession and the potential escalation of conflicts in the Middle East. Both of these variables hold profound implications for the market's future trajectory.
The Market is Expected to Continue Bouncing Around
In the current landscape, it is reasonable to assume that the market will continue to bounce around within a range bounded by $80 on the lower end and $85 on the upper end. Until a definitive breakout transpires, traders should approach this market with the understanding that it remains predominantly short-term and range-bound in nature. The volatile geopolitical climate and economic uncertainties warrant a cautious approach to this commodity, with traders monitoring developments closely to make informed decisions within this difficult market.
Potential signal: Buying oil makes sense for a run to the 200-Day EMA above, regardless of grade. (US or UK) I am setting stop $1.10 under current values.
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