The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Thursday to show signs of life again as the $80 level has offered support. By doing so, the market is trying to figure out whether or not the inverted head and shoulders is going to be verified, as we had reversed so quickly after breaking out.
Keep in mind that underneath the candlestick that is the last 24 hours, we have the 50-Day EMA offering support, and of course the neckline from the inverted head and shoulders. At this point, if we do take off and break out above the top of the candlestick for the Wednesday session, it’s likely that we will continue to try to get to the 200-Day EMA, which is currently right around the $87.50 level. Anything above there could really start to shift the overall trend, but right now it looks like we are more or less hanging around trying to figure out whether or not the short-term move can stick.
The market is Probably Oversold
- Keep in mind that the West Texas Intermediate Crude Oil market features the same problems that you have been other oil markets, as there is a serious concern when it comes to global demand.
- After all, the market is going to continue to have to determine whether or not the economy is going to grow, and right now it doesn’t look that hot.
- However, we are probably oversold, so it does make a certain amount of sense that we would see oil struggle from a longer-term standpoint. However, the market still going in one direction forever, so it does make a certain amount of sense at this pop happens.
- On the other hand, if we turn around and break down below the 50-Day EMA, then we could drop down to the $75 level, where we had seen a lot of support previously.
Regardless of what happens next, it’s probably going to be choppy and volatile, and of course calling for smaller position sizes as the volatility can cause massive losses if you are over-levered, something that could get you into serious trouble. At this point, it’s a short-term trading opportunity more than anything else, and I would be treated it as such as a trend change is going to take some type of fundamental reasoning.
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