Oil Continues to Look for Direction

The situation continues to be very noisy, but if you can trade short-term charts and watch them all day, you may have a potential setup at this point in time.

• During Tuesday’s trading session, the West Texas Intermediate Crude Oil market saw a slight rally and approached the 50-Day EMA, but some of those gains were lost.
• The market has been range-bound for some time, with support at $72.50 and resistance at $82.50.
• At present, we are in the middle of this range and there is little to do unless seeking short-term gains.

The 50-Day EMA appears relatively stable, and many traders may consider it a potential profit-taking target. However, I believe that this market will continue to consolidate as we wait to see if industrial demand will increase, or if the global economy will slow down and push oil prices lower. At this point, the market is likely to continue to see a lot of questions asked about central banks, and of course the economic movement of goods and services. At this point, there are a lot of concerns about growth, and that has kept a bit of a lid on the market.

• Brent markets have also rallied during the trading session on Tuesday, as we are looking at the 50-Day EMA as a potential resistance barrier.
• The market breaking above there could open up a move to the $90 level, which of course is backed up by the 200-Day EMA as well.
• Because of this, think is probably only a matter time before the sellers would come back in if we do reach that level unless of course there is some type of major shift in attitude.

Underneath, the $77.50 level is a significant support level. As long as we stay above there, I think we stay in this general vicinity, and we have to figure out where we want to go longer term. In the meantime, you are probably looking at the likelihood of a range bound market more than anything else, and therefore I think we have to look at this through short-term choppy trading. If we were to break out of this box, then we could go about $10 higher or lower, but until then you will have to be very cautious about your positioning. With that, I think this is a situation that continues to be very noisy, but if you can trade short-term charts and watch them all day, you may have a potential setup at this point in time.

Ready to trade our Crude Oil Forex? We’ve made a list of the best Oil trading brokers worth trading with.