- West Texas Intermediate Crude drop to from a six-week high almost immediately during the trading session on Thursday, as we initially gapped to the upside, and then collapsed.
- We are pulling back into the previous consolidation area, the area that I figured would end up being the “summer range” for oil.
- Because of this, I think we will have to wait and see how things play out, but it must be stated that the initial move in oil over the last few days had more to do with rhetoric than anything else.
Donald Trump and Russia
Keep in mind the Donald Trump made several comments about Russian oil, and starting to grow tariffs that countries like India that continue to buy it. This has caused a lot of concerns about supply of oil globally, and you’ve seen the effects here. That being said, I think we are just simply heading back into the consolidation area and therefore I would still anticipate the $65 level as being a massive floor. If we were to break down below there, then it would obviously be very negative, but as long as there is a threat of the United States getting aggressive about Russian oil, I think there is a little bit of a floor in this market regardless.
Ultimately, the size of the candlestick does suggest that we will have a little bit of follow through, but you should also keep in mind that Friday is nonfarm payroll, and that could cause quite a bit of noise when it comes to volatility and the overall action in the US dollar. The US dollar of course has a certain amount of influence on the oil market, but I also think that we are going to be noisy all around the financial markets during the day as per usual, and we will have to see if the Friday session can send this market back above the $70 level. If it cannot, that I think we just drift a little bit lower in the short term.
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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.