Potential signal:
- If we break above the $66.50 level, then I am a buyer with a stop loss at $64.50, and a target of $68.66 level.
It appears that the crude oil markets have been fairly quiet over the last 4 trading sessions, with the Light Sweet Crude market being particularly interested in the $65 level. This is an area that previously had been significant resistance, so I think it is worth paying close attention to. After all, there should be a certain amount of “market memory” attached to this, but we will have to wait and see whether or not this actually holds as support, because it has been such a volatile beast as of late, crude oil is a market that a lot of people I think are just simply sitting on their hands and waiting for some type of sign.
Technical Analysis
I will say that doing almost nothing for the last 4 days is a slightly bullish turn of events given the fact that we had been so viciously volatile over the previous 2 weeks. The situation between the Iranians and the Israelis seems to have calmed down, and that of course does take some of the “risk premium” out of the crude oil markets. Now, it appears that we are willing to just sit here and try to figure out where to go next. That being said, it’s worth noting that people are not afraid of this market anymore, and that nasty today selloff from $78 seems to have hit a brick wall. The longer we spend time in this general vicinity, the more likely it is that people will be willing to start going long again. In other words, they are no longer “afraid” of holding oil.
However, we also have to keep in mind that we could just be waiting for the next catalyst. That catalyst doesn’t necessarily have to be positive, and it is probably worth noting that there is a wick to the upside on the last 4 days. This is why we can break above the highs of the Thursday session, then I think it opens up the possibility of a much bigger move to the upside, initially checking the 200 Day EMA which is near the $60.33 level. However, if we break down below the $63.40 level, then we may have to revisit $62.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.