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If we do get a rally from here, the first signs of exhaustion will more likely than not be a nice selling opportunity.
- The West Texas Intermediate Crude Oil market pulled back a bit on Tuesday after rallying.
- This shows just how noisy this market is, and it suggests that we are still going to struggle to go higher over the longer term.
- After all, this is a market that has been drifting for a while to the downside, and now it looks like we are continuing to see plenty of bearish pressure.
Dropping Demand Affects Oil Markets
The crude oil markets have been suffering at the hands of concern about recessionary concerns, and therefore demand dropping. After all, if global economies are going to start slowing down, then the demand for crude oil will drop. This is especially pertinent due to the fact that OPEC had very little to say when it came to increasing production, and prices still continued to drop.
The candlestick is a neutral candlestick, so it does suggest that we have a lot of confusion, so I think we are going to continue to be cautious about putting too much into the market at any moment. I believe that the 200-day EMA above could offer dynamic resistance, somewhere near the $26 level. If we were to break above the 200-day EMA, the market is likely to go looking to the $100 level after that. The $100 level has a lot of psychology attached to it, so I think you would see new sellers coming back into the marketplace.
On the other hand, if we were to break down below the $87 level, then it’s likely that the market will drop down to the $80 level. In general, I think it’s likely that we go down to the $80 level, especially if the Federal Reserve has to tighten its monetary policy due to massive amounts of inflation. The CPI figures coming out on Wednesday will almost certainly give us an idea as to whether or not the Federal Reserve has to tighten monetary policy, which of course will strengthen the US dollar overall. In general, I think that’s probably what we are going to be looking at over the next 24 hours. I do not have an interest in buying crude oil, and I think that if we do get a rally from here, the first signs of exhaustion will more likely than not be a nice selling opportunity.
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