Potential signal:
A daily close below the 200-Day EMA opens a short to the $71 level.
I would have a stop loss of $2 above the 200-Day EMA.
Light Sweet Crude Oil (WTI)
The crude oil market has gapped lower to kick off the trading session on Monday, as there has been a lot of headlines out there suggesting that the Iranians and the Americans are going to sign some type of agreement to extend the overall ceasefire and perhaps move towards a peace agreement.
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The light sweet crude oil market has found the 200-day EMA to be support. The 200-day EMA, of course, is an indicator that determines the overall long-term trend, and I think a lot of people are watching $80 as a major support level.
Technical Support and Headline Noise
So, the market breaking down below the $80 level, I think, opens up a significant push to the downside, perhaps to the $70 level. I don't necessarily expect that to be an easy move, but it is possible.
Ultimately, I think this market remains one that will move on the latest headlines, and the latest headlines have recently suggested that perhaps we are getting a little overdone here when it comes to selling pressure.
If we do bounce from here, I think the $85 level could offer a little bit of resistance. It's a large, psychologically significant figure and the top of the gap that we started with during the day here on Monday. Signs of exhaustion would be selling opportunities on a bounce to that level. If we get above the high of the Friday candlestick, I think that could change quite a bit.
Ultimately, this is a market that remains noisy. I think it remains held hostage to a certain extent by the next statements coming out of Washington or Tehran. So, you have to be cautious, but one would think breaking below the 200-day EMA could open up quite a bit of downward pressure from here.
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