- In front of you, you can see that the West Texas Intermediate Crude Oil Market did rally a bit during the early hours on Thursday but has pulled back a bit from the 50 day EMA.
- All things being equal, this is a market that given enough time, I do think we'll have to form some type of bottoming pattern.
- With this being the case, I think you've got a situation where it might be noisy, but ultimately, this is a market that is going to find a pretty significant floor near the $72.50 level.
That being said, I think you also have to look at this through the prism of whether or not there is going to be enough demand, because of course there are a lot of people out there worried about whether or not the global economy is falling apart. We have been very range bound during the course of the last several months and I think that probably continues. There are arguments for lower oil prices in the form of a slowing economy, but at the same time there are arguments for higher oil prices due to geopolitical issues.
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As long as that's going to be the case, I think this is what you get range bound back and forth trading because of this. You're in a situation where you're buying dips and probably getting rid of your position somewhere near the 50 day EMA or the 200 day EMA under both circumstances. If we do break above all of that, then the $84.25 level could be targeted, but that's going to take some type of shift in fundamentals and momentum.
Ultimately, this is a market that I think is going to remain range bound over the longer term, but I also recognize that it is going to be very noisy, and you have to be cautious with your position size. Because of this, I prefer to buy on the dip more than anything else at this juncture.
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