Ultimately, I need to see some type of momentum or supportive candle that I can jump on to take advantage of the overall momentum.
The West Texas Intermediate Crude Oil market initially rallied on Tuesday but gave back gains at the 50-day EMA again. This indicator continues to be important, and the fact that we could not break back above it could be a little bit of a “heads-up” as to the short-term directionality of the market. There is still plenty of support underneath, and perhaps the market feels the need to test it, as we have seen so much hesitation to go higher.
At this point, it could be a situation where traders are simply worried about demand going forward, as growth is all but written off in the short term. After all, if economies are not growing, they are not looking likely to demand the line of crude oil. That being said, it’s only a matter of time before demand comes back into the picture, especially due to the fact that the overall production fell off rather hard during the pandemic. Furthermore, we have to pay close attention to the GDP numbers overall, due to the fact that the demand will be reflected in the chart as well.
Looking at the start, you can see that the overall attitude of the market has been bullish for some time, despite the fact that we had pulled back a bit. The uptrend line underneath will continue to be important, especially with the $104 level looking so important previously. Ultimately, I think that the market breaking down below the uptrend line could open up significant downward pressure, perhaps opening up the possibility of the market moving to the $100 level. And he moved below the $100 level could open up a massive pullback and fall in this market, but at this point, I think we have plenty of support underneath that we can take a look at. On the upside, if we were to break above the $112 level, then it’s possible that we could go looking to reach the $116 level, perhaps even the $124 level after that. Ultimately, I need to see some type of momentum or supportive candle that I can jump on to take advantage of the overall momentum. Until something changes fundamentally, I would anticipate that oil still has a bit of a bid underneath it.