- The West Texas Intermediate Crude Oil market has tried to rally during the trading session on Thursday, but it seems to be struggling with the idea of the 50-Day EMA.
- Because of this, I think we probably have a situation where the sellers come back into the market eventually, and push crude oil lower.
- This makes a significant amount of sense, considering that the global demand should be dropping but at the same time, we must worry about supply, as it is so constrained in the physical market.
A lot of this is going to continue to come down to the global outlook for growth, which is dismal at best. The 50-Day EMA is obviously a technical indicator that people pay close attention to, but you can also make an argument that it was the $80 level that offered all the resistance. If we were to break above the 50-Day EMA, then it’s likely that this market could go looking to the $82.50 level, possibly even the $85 level.
I Expect a lot of Volatility
You can see that I’ve drawn a falling wedge on the chart, so that is something that you will have to keep in mind from a technical analysis standpoint, and quite frankly we could fulfill that target, meaning that we could reach all the way to the 200-Day EMA, which is just below the $88 level. I don’t know that we get there, but even if we did, it’s likely that we would see quite a bit of selling pressure. If we break above it, then look out, the trend has certainly shifted for a longer-term move higher.
A lot of people are concerned about the supply of crude oil, and that may very well be an issue down the road. However, in the short term, it looks as if it favors more of a concern about the global slowdown, and of course the idea of a lack of demand. All things being equal, I expect a lot of volatility but the next week or so is going to be very thin as far as volume is concerned, so do not be surprised if we just simply chop back and forth over the next couple of sessions, with maybe more of an eye on the downside as we have been in a longer-term downtrend for so long.
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