The West Texas Intermediate Crude Oil market has initially dipped a bit during the day on Thursday, only to turn around and show signs of life again. By doing so, it appears that we are threatening the 50 day EMA just above. This of course is an important technical indicator that a lot of people pay attention to, so do not be surprised at all to see a bit of a reaction. You should also keep in mind that the Friday session is a shortened futures session due to the holiday, so therefore you need to be early to the market. Once we hit noon in New York, things will suddenly drift off.
Crude does look like it is trying to take out the 50 day EMA and whether or not it can do it on Friday is a completely different question. However, it certainly looks as if we are building up pressure to do just that. If we do take out the 50 day EMA, then my next target would be the $70.40 level, where we had sold off from previously. If we were to take out that big wipeout candle, that would of course be a very bullish turn of events for the market.
That being said, I am hesitant to put on big positions this time year anyway, and especially a market like oil which shuts down. The 200 day EMA underneath at the $69.43 level is the “floor the market” from what I see, so as long as we stay above there, I think we still have a good shot at rallying, but if we were to take that out to the downside, then I would anticipate a move down to the $65 level.
There is a lot of push and pull when it comes to the idea of demand for crude oil, as omicron variant has not been as bad as people had anticipated. With that in mind, I think people are starting to step out into the risk curve a little bit and buy oil. Ultimately, a lot of this will be settled in January, but it certainly looks as if we are going to end the year on the right foot when it comes to crude oil prices and therefore the buyers will probably feel pretty good going into January.
