- The West Texas Intermediate Crude Oil market has bounced significantly during the trading session on Wednesday as we had seen a lot of noisy behavior. At this point, the market is far too oversold, and it does make sense that we would bounce.
- Looking at this chart, you can see that we have been in a down trending channel and bounced from the bottom of it.
- This is a simple oversold bounce that I think people are going to pay attention to, but the $85 level above is an area that I think a lot of people would be paying attention to.
The $85 level is a psychologically important figure, and an area that previously has been supported. I would anticipate seeing quite a bit of exhaustion that people get short on, with a 50-Day EMA sitting near the $90 level and is dropping. What’s interesting is that it’s at the very top of the channel and has acted much like the trendline that formed that same channel. Ultimately, I’m looking for signs of exhaustion to jump on, because we are in a downtrend for multiple reasons.
Dwindling Demand Likely to Affect the Market
Looking at this chart, it’s obvious that we have been in a downtrend for a while, and we must continue to look at the demand part of the equation as it looks like we are ready to see a major global slowdown. That means that there will be a lot less demand for crude oil, and I think now we will see this market follow the same general path that it has been.
I think the overall situation for oil is going to remain somewhat negative, but we are getting to an oversold condition and getting a little overdone in general. If we can break above the 50-Day EMA, we are more likely than not going to go look into the 200-Day EMA. That would be a major turnaround, but if we were to break above there it’s likely that the market could go much higher as it would be a huge trend change. The size of the candlestick is interesting, and it does suggest that perhaps the Thursday session might be bullish, but sooner or later the overall weight of the market will come into the picture, causing destruction.
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