- The first thing I see is that we have broken through a major support level, which is not a huge surprise considering that the US jobs report was pretty bleak.
- At this point in time, it looks like the market is starting to roll over and price in some type of recession, and I think that does make a lot of sense considering how many negative signs we have seen and not only this market, but multiple other ones.
Chinese demand has been cooling, and that of course has its own knock on effect here, and with this being the case, it makes a certain amount of sense that rallies will continue to get sold into. I think Wall Street is starting to finally come to the conclusion that maybe not everything is okay, and therefore I think you’ve got a situation where the crude oil market is telling us just how panicky a lot of larger traders are starting to get.
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Plunging Even Lower
At this point in time, it looks like we are going to continue to plunge, and therefore I think it’s got a situation showing itself that we will probably go looking toward the $65 level. The market of course is going to continue to look at the US economy cooling as something that is going to cause massive effects in multiple markets, not just this one. However, oil market was considered to be the “lifeblood” of the economy, and therefore if the economy is dropping, oil demand will plunge not only in China as we have seen, but it should continue to do so in the USA at this rate.
Because of this, I think you get a situation where anytime we rally; sellers will be interested in trying to get short. I’d be paying close attention to the $70 level above, which is a large, round, psychologically significant figure, and an area that we have seen a little bit of noisy behavior previously.
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