The West Texas Intermediate Crude Oil market has struggled a bit during the early hours on Wednesday, as we are trying to confirm the shooting star from the previous session. Ultimately, the market still sees quite a bit of support below at the $75 region, and a lot of people will be paying close attention to that area if and when we do get down there. With that being the case, the market is likely to see a lot of volatility in this area, so the question now will be whether or not we see buyers coming to pick up “cheap oil.”
If we can break above the top of the shooting star from the previous session, then the market is likely to go looking toward the 200-Day EMA, something that I do think is very possible considering that there are questions as to whether or not the economy is slowing down or if inflation is picking up now that the PPI has flown directly in the face of the CPI numbers during the previous session.
Brent markets also have fallen during the trading session after forming a shooting star during the previous day. Brent of course will follow the overall attitude of the WTI grade, as crude oil continues to be a bit of a messy situation. The $80 level underneath should be massive support, and therefore it’s likely that the market will find buyers in that general vicinity. If we do see some type of rally at this point, there is a lot to chew through in order to go higher, but we could go looking to the 200-Day EMA here as well. A move below the $79 level could open up a bigger move to the downside, which would be a huge recessionary signal.
At this point, it seems like each market is trying to price in a different reality, while stocks continue to price in the idea of cheap and easy money forever, crude oil is trying to price in a very bad economic reality. Bond markets don’t look impressed, and precious metals are all over the place. Keep your position size reasonable.
Source: forecasts
