The West Texas Intermediate Crude Oil market has fallen rather drastically during the course of the trading session on Thursday, as we gapped lower and then reached below the $65 level. The market then fell towards the $62.50 level before turning around late in the day. The candlestick ended up being a bit of a hammer, and we are sitting just above the 200 day EMA. Those are all of the good signs on this chart, but this looks very weak to say the least. If we bounce a bit from here it is likely that the $65 level should offer a bit of resistance, but quite frankly we have finally broken through major support, something that I had hinted could happen in the next few days most of this week.
To the upside, the 50 day EMA is starting to slump lower, as the $70 level sits just above it. At this point, I think that is going to be your “ceiling in the market”, as traders are starting to worry about whether or not the delta variant is going to continue to drive down demand, or if it is something a little bit more concerning in the form of a global slowdown? After all, industrial numbers have been shrinking around the world, and numbers on the mainland in China have been shrinking when it comes to economic indicators.
If we were to turn around a break down below the 200 day EMA, then it is likely that we go much lower, perhaps reaching down towards the $60 level, possibly even as low as the $50 level. The US dollar strengthening has had a negative effect on this market as well, so when you continue to look at the market through that prism, it looks like we just started to see that headwind. I think that we probably get a short-term bounce, but I would not be surprised at all to see this market break back down, as it s certainly showing that something just broke. If that is going to have any follow-through, it is very likely that we will see a much bigger move to the downside over the next several weeks.
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