The West Texas Intermediate Crude Oil market initially tried to rally on Monday but then gave back gains to drop towards the $79.85 level before stabilizing a bit. At this point in time, the market also has the 50-day EMA sitting just below and offering support, which suggests that there are value hunters underneath willing to take advantage of “cheap oil.”
Keep in mind that the crude oil markets are highly sensitive to the overall risk appetite of traders, but also pay close attention to the idea of the reopening trade kicking off. After all, the pandemic shut everything down and drove down the value of crude oil for some time, but we have a scenario where the markets will continue to be very noisy, which makes sense that the recent attempts by the Biden administration to get OPEC to produce more crude oil have failed. Therefore, it is likely that we will continue to see a lot of hesitancy when it comes to traders shorting this market for anything along the lines of a bigger move. This is going to continue to be a scenario where we need to find reasons to look towards stability in order to get long again. You cannot short this market, because the demand for crude oil continues to be very strong.
That being said, the market is likely to continue to see the 50-day EMA as a potential support level, but the most important thing to pay attention to is the fact that we are in an uptrend anyway. Above, we have the $85 level as a major resistance barrier, so it does make sense that it would end up being a target. Furthermore, if we were to break above that level, then it opens up the possibility of a much bigger move, based upon the bullish flag that we have been trading in. The next target would be the $87.50 level, and then eventually the $90 level. In general, I believe that we will get there over the course of the next couple of weeks, but it may take a significant amount of momentum to make that happen. Regardless, I have no interest whatsoever in shorting this market.
