- The West Texas intermediate market has seen crude oil initially gap higher, only to pull back and turned around to show signs of bullish pressure.
- At this point in time, it’s obvious that we have a significant amount of resistance just above, so traders will be paying close attention to this level.
- The level is the $65 level, which is a large, round, psychologically significant figure, and therefore there will be a lot of interest in this area. If we can break above there, we might be a “off to the races.”
Technical Analysis
The technical analysis for this market is pretty much the same as it has been for most of the last 2 months. The $60 level below is considered to be supported, just as the $65 level above is significant resistance. Ultimately, I think this is a market that will make a distinction as to whether or not demand will pick up, but we also have a lot of concerns when it comes to the fact that OPEC continues to increase production, throwing more supply into the markets. However, this is a time of year that technically we tend to see a lot of buying pressure due to “driving season” in the United States.
Ultimately, if we can break out to the upside I think we will probably go looking at the 200 Day EMA, near the $69 level, just as if we break down below the $60 level, then I think we drop down to the $55 level. The $55 level was the scene of a recent double bottom, and an area where I think you will see a lot of interest if we do in fact drop down to that area. However, the action over the last 3 days has suggested that the buyers start to become a little bit more aggressive, especially as volume is picking up. This for me at least is bullish.
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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.