- During my daily analysis of the West Texas intermediate crude oil market, or the “US oil” market, the first thing that comes to mind is the fact that the $70 level is being challenged, which of course is a large, round, psychologically significant figure.
- The market has been trading between the $65 level underneath current levels, as well as trading below the $72.50 level.
- In other words, we are essentially in the middle of the overall range that we have been in for a few months now.
What I find interesting in this market is that you could make an argument that we are trying to form some type of basing pattern, but we just don’t have enough momentum to get things going. If we can break above the $72.50 level, we could take off to the upside, but you really don’t see this market as being “broken out” until we get above the $70 level. If we can break above there, then the market could fly. However, you have to ask the question of “why would we?”
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Oil Seems Stuck
Crude oil markets are range bound, so instead of complaining about how little action there is in the market, some traders have decided to take advantage of it. Quite frankly, you can go back and forth in both directions in this market and perhaps have gains on 5 or 6 trades before finally being proven wrong. At the end of the day, you just became a profitable trader and that’s the goal.
If you are a short-term range bound trader this is probably the market for you. If you are a trend trader, then things become a little bit more difficult, except I would point out the fact that the $65 level has been major support for the last 2 years, so one would assume that it would eventually hold. If it gets broken, things could change, but right now I think you get a situation where if you are shorter term focus, you might be able to make some plays here. Currently, we are essentially dead center of the range.
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