The WTI Crude Oil markets failed to impress during the session on Monday, but did manage to hover right around the $104 level, an area that I suspected would be supportive. Because of this, I think that we still have a little bit of a fight left in the buyers, and a bounce from here would not be surprising to me at all. I personally don't like the idea of oil being this high, but then again the markets will decide what's corrected and what's not.
Within this chart, I think if we get a daily close below the $104 level, we could see a significant pullback all the way down to the $99 level. I don't know that that's going to happen, but it is most certainly something to pay attention to. Because of this, I think that waiting for the daily close will be the way to go going forward. And this also has implications on the upside as well, as we need to see a daily close above the highs for the Monday session in order to start buying as well.
Take your time, patients will be needed
By waiting for the close, you can be assured that at least the majority of the market is expressing his opinion in one direction or another. That being the case, you have to be very careful but you also have to be cognizant of the fact that the markets probably have a lot less "big money" in them right now, simply because we are in the heat of the summer for both North America and Europe. This is traditionally one of the least liquid times of the year, and because of that, I feel that the markets will be very difficult to trust in the short term.
Looking forward, I believe that the real move will be had sometime in September, once the markets get a good read on what the Federal Reserve is going to do as far as quantitative easing is concerned. After all, this is more or less an “anti-dollar" type of play.