Bulls Facing Strong Resistance at $8

I think we still have a lot of confusion ahead, so there’s no real reason to think that anything changes anytime soon, and therefore you range-bound trader’s going to continue to level oil. 

• The West Texas Intermediate Crude Oil market rallied significantly to the upside during the trading session on Tuesday, as we had reached the bottom of the overall consolidation area.
• Oil is very noisy now, mainly because we have no idea what to do about the global economy. The global economy seems to be slowing down and that will continue to keep downward pressure on the value of oil, as less demand will be needed by economies that are not moving as quickly.
• However, it’s also worth noting that the market has been rather stable as of late, so it does make a certain amount of sense that we would see this market continue to go back and forth. The attitude of the market has been one of lackluster performance, and I just don’t see that changing anytime soon.

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When you look at this chart, you can see that the 50-Day EMA is sitting just above current pricing, and just below the bottom of the $80 level. The $80 level course has a large, round, psychologically significant figure, and an area that sits just below a major resistance barrier. The $82.50 level continues to be an area of interest, so I think that will be something worth paying attention to as well. If we were to break above the $82.50 level, then it’s likely that the market could go looking to the 200-Day EMA above.

A lot of Confusion Ahead

On the other hand, if we pull back, we could see an attempt to get back down to the $75 level, and then perhaps down to the $72.50 level, where we had seen quite a bit of support previously. I think until something changes overall, this is a market that goes back and forth and therefore if you are range bound trader, you probably are looking at things like the stochastic oscillator to tell you and confirm when you are buying and selling between these 2 obvious areas.

I think we still have a lot of confusion ahead, so there’s no real reason to think that anything changes anytime soon, and therefore you range-bound trader’s going to continue to level oil. Eventually, we will break out, and when we do it’ll be obvious as to which direction you should be going.

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