The market is currently testing the very bottom of the range and appears to be comfortable staying there.
- At the start of Friday’s trading session, the West Texas Intermediate Crude Oil market attempted to rally but quickly lost its gains due to resistance at the $70 level.
- It is possible that the market will test the bottom of the last few candlesticks, potentially leading to a breakdown to the $65 level.
- However, there is likely to be strong support underneath, so if the market breaks below that level, it could go down to $65.
The market is currently testing the very bottom of the range and appears to be comfortable staying there. This could lead to continued negativity. On the other hand, if the market manages to break above the $70 level, it could potentially rise to the $72.50 level. That being said, I would not hold my breath for that move, as things look so dire at the moment. The seller still seems to have a grip on the overall attitude and momentum of the market at this point.
During Friday’s trading session, Brent attempted to rally but encountered resistance, similar to WTI. The $75 level has acted as a barrier in the market, and as the market failed to break above it, there is a likelihood of the market heading towards the $70 level in the near future. This indicates the fragility of the global economy and the expected significant lack of demand as economies slow down.
Rallies in the market at this point should be viewed as selling opportunities. I will be looking for opportunities to short the oil markets after signs of exhaustion when these rallies inevitably occur. However, if the Brent market breaks below the $70 level, it could mark a new leg of negativity that could greatly affect the market. It appears that this market is a sign of worsening conditions, and therefore oil will be vulnerable to investors who are seeking safety.
Ultimately, crude oil is going to continue to be a gauge of where traders think that the future economy is heading, and right now it looks like traders are very convinced that we are about to see a lot of negativity. His lungs are going to be the case, crude oil will not be an asset that does very well. Furthermore, a lot of traders will be paying attention to Jerome Powell next week, during the Federal Reserve interest rate decision to see if the central banks around the world are going to continue to raise rates to slow down growth and inflation.