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If we can break above the $100 level, I believe the market may turn around completely.
- The West Texas Intermediate Crude Oil market has bounced a bid from a major support level during the trading session on Thursday.
- We are now above the $91 level, which is a nice bounce, but it does not necessarily mean that the world has changed.
- If you have been following my analysis here at DailyForex, you know the move that I had hoped to see is some type of bounce that we can start selling.
Crude Oil Forming a Death Cross
We are at the top of the range for the candlestick, and it suggests that perhaps we probably have a little further to go to the upside. I like the idea of looking right around the $94 level for significant resistance, perhaps extending all the way to the $95 level. The $95 level obviously has a certain amount of psychology attached to it, and of course, we also have the 200 Day EMA hanging around in the same area, right along with the 50 Day EMA dropping down toward that area as well. In fact, we may be getting ready to form a “death cross.”
It should be noted that the “death cross” is when the 50 Day EMA crosses below the 200 Day EMA, signifying to longer-term traders that we are now in a very bearish downtrend.
I think at this point we probably have a situation where we continue to saw tooth on the way down, and this bounce is just the latest iteration of a bit of a bounce, and therefore I think it’s only a matter of time before the sellers come back in. It will be interesting to see how things play out going forward because everything has been so negative and of course, there’s also the possibility of the Iranians being able to pump oil into the market as well as we continue to see discussion around the Iranian nuclear deal.
One of the biggest drivers of prices going lower will be the strengthening US dollar and a lack of demand. The “reopening trade” seems to be over, so therefore it makes sense that oil demand will drop regardless. If we can break above the $100 level, I believe at that point the market may turn around completely, but until then I look at things as being suspicious to say the least.
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