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Commodities are struggling overall, and it looks like the sellers have finally come for this one.
The West Texas Intermediate Crude Oil market fell hard on Tuesday as traders came back from holiday in America. The market sliced through the crucial $100 level, so at this point, I think we have a serious problem when it comes to the overall uptrend. The 200-day EMA sits just above the $95 level, and I think we need to pay close attention to that level as well.
It seems as if the crude oil market is finally joining the rest of the commodity markets, which have been breaking down. The noisy behavior of the market has finally given way to volatility, and I think it’s only a matter of time before we break down low there. If we do break below the $95 level, then it will kick off massive selling. The fact that the market lost almost 10% at one point during the day does not bode well for the future of this market, and I think it’s only a matter of time before we see further downward pressure, as it looks like the lack of supply is not enough to have people trying to buy this market in this environment.
If the US dollar continues to strengthen quite drastically, it’s likely that we will see the crude oil market fall. Ultimately, I think rallies are to be sold into until we break above the $110 level, which is also where the 50-day EMA sits. That’s where we started the day on Tuesday, which looks pretty far away. Ultimately, I think short-term rallies will continue to be sold into at the first signs of exhaustion, and I think that short-term charts are probably what you want to focus on. If we were to turn around and break above the 50-day EMA on a daily close, then it’s likely that this market could go to the $120 level. That would obviously be a massive bullish move, but I don’t see that happening in this type of environment. With other commodity markets such as copper, wheat, and natural gas falling apart, it’s not a huge surprise that we have seen more downward pressure over here. Commodities are struggling overall, and it looks like the sellers have finally come for this one.
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