Crude Oil Forecast: Continues to Drift Lower

While there is potential for a rally toward the 50-Day EMA, the increasing bearish sentiment suggests that lower levels are more likely in the near term. 

The West Texas Intermediate (WTI) Crude Oil market experienced a significant downturn at the start of the trading week on Monday, continuing the trend of volatile behavior. The market could potentially drop to the $65 level if it breaks below the swing low from a couple of weeks ago.

On the other hand, the market could reverse its course and attempt a rally back to the 50-Day Exponential Moving Average (EMA). However, current market conditions do not inspire much optimism for such a move. Even if such a rally were to occur, it would merely represent another shift within the trading range that the market has been oscillating within for some time. The market appears to be increasingly bearish, and it seems likely that we will see an attempt to reach the bottom of the large range, i.e., the $65 level.

Brent markets have also shown signs of exhaustion, with prices falling. The $70 level is a key area to watch, as it represents a significant psychological threshold and has previously provided support on multiple occasions. A break below the $70 level would be surprising and would signal a negative turn for the market. However, a bounce is more likely, although any upward movement is expected to be capped near the 50-Day EMA.

• Overall, the market is expected to remain highly volatile. The market’s direction is currently being influenced by a tug-of-war between the impact of tight crude oil supply, which could drive prices higher, and potentially weak demand, which could keep prices in check.
• At present, the market is still largely range-bound, but the increasing aggression of sellers is noteworthy.
• This could lead to something bigger, and the central bank meetings this week could have a bit of a knock-on effect here as well.

In conclusion, both WTI Crude Oil and Brent markets have started the week with significant downturns. While there is potential for a rally toward the 50-Day EMA, the increasing bearish sentiment suggests that lower levels are more likely in the near term. The market’s direction will continue to be influenced by the balance between supply and demand factors, leading to ongoing volatility. Traders should keep a close eye on key support levels and be prepared for continued fluctuations in the market.

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