Continues to Look Toward Lower Levels

The market continues to be characterized by noise and choppiness, requiring traders to navigate through these conditions. 

• The WTI Crude Oil (US Oil) market experienced an initial attempt to rally during Thursday’s session, but quickly retraced its gains, indicating signs of hesitation and exhaustion.
• Following the substantial upside move, this could be interpreted as a “bear market bounce,” suggesting the market may have become overextended.
• While a revisit to the lows is possible, it remains uncertain whether a breakdown below that level will occur. Historically, the market tends to trade within a range during the summer months, and we may be witnessing the establishment of such a range.

The market continues to be characterized by noise and choppiness, requiring traders to navigate through these conditions. The 50-Day Exponential Moving Average (EMA) is likely to act as a resistance level, but if it is breached, the next target could be the 200-Day EMA, representing the upper boundary of the anticipated summer range.

Turning to the Brent market, an initial attempt at rallying during Thursday’s trading session was followed by a decline. Brent faces challenges due to concerns about a global economic slowdown and a general lack of demand. The weak demand for crude oil reflects ongoing global uncertainties. As oil serves as the “lifeblood” of the economy, a lack of momentum in the global economy translates into reduced demand for crude oil.

Given the current conditions, the market is expected to remain highly volatile and choppy. It is likely to continue the trend of fading rallies, which has been the prevailing pattern for a while. The recent significant turnaround and major bear market bounce further reinforce the idea that gravity is likely to play a role in the market once again. While fresh new lows may not be reached, it is evident that the market lacks the sustained momentum for prolonged upward movement.

TL; DR: the WTI Crude Oil (US Oil) market displayed signs of hesitation and exhaustion after attempting an initial rally. The market may revisit the lows, but the possibility of a breakdown remains uncertain. Expectations point towards a range-bound trading environment during the summer season. The market continues to be characterized by noise and choppiness, with the 50-Day EMA serving as a potential resistance level. Meanwhile, in the Brent market, the prospect of a global economic slowdown and weak demand presents challenges. The prevailing strategy remains to fade rallies, considering the significant bear market bounce. While fresh lows may not be reached, the market lacks sustained momentum for a prolonged upward move. Traders should exercise caution and be prepared for continued volatility in the oil markets.

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