- The West Texas Intermediate Crude Oil market has fallen slightly during the trading session on Thursday, testing the 50-Day EMA.
- Keep in mind this market is very volatile, and it is of course pressured by multiple different factors.
- Because of this, I don’t know that you get any serious clear-cut trade, at least not very easily.
It is also worth noting that being stuck between the 50-Day EMA and the 200-Day EMA typically means that we are during squeezing for a bigger move, and quite often you will see a rather explosive candlestick given enough time. That’s essentially what I am waiting on here, because the biggest problem oil has is all the uncertainty about the global economy. After all, crude oil is the lifeblood of the global economy, and it tends to rise and fall with economic fortunes.
Expect a Lot of Back and Forth
One of the biggest issues that we have currently is that the Chinese economy keeps getting locked down partially, so that is the world’s biggest consumer of crude oil stopping and starting consistently. This means that the band is a lot less for the Chinese than usual. Add to that the fact that there is fear of a global recession, and you can see where there would be a lot of concerns about the oil market. Lower demand obviously means lower pricing given enough time.
However, it’s also worth noting that OPEC had previously cut 2 million barrels per day from production, so it does suggest that perhaps we would probably see a bit of a bump in price. We recently broken above a short-term barrier and broken out of an obvious down-trending channel. Those are both very good signs, but it does not necessarily mean that crude oil is going to have the easiest path higher. In fact, I would anticipate that even if we are very bullish, the reality is that it is probably only a matter of time before we get the occasional drawdown. While I favor the upside all things being equal, I also can make an argument for the downside. If we break down below the $82.50 level, then it’s likely to be very negative. On the other hand, if we break above the 200-Day EMA, then it’s likely that this market will continue to recover and go higher. Between those 2 levels, expect a lot of back and forth.
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