The WTI Crude Oil markets tried to rally during the session on Friday, but as you can see the $104 level offered enough resistance to turn the market back around and form a shooting star. That shooting star suggests that the market is going to go farther to the downside, but we do see quite a bit of support below. In fact, I believe that the market is fully supported all the way down to $100 a barrel, and as a result I am not selling this market at all.
However, if we broke the top of a shooting star, which means of course the $104 level, we could see the market go much higher. We could have a return to the consolidation, which would more than likely clear the way to at least $108, which is a sizable move for the short-term trader.
Watch the value of the US dollar
The value the US dollar of course is a major factor in this market, and with the Federal Reserve continuing to ease, it's hard to imagine that the dollar is going to take off to the upside. This is why I don't think oil can break down much below the $100 a barrel level anyways, and therefore I really look at this is a "buy only" market at the moment.
With that in mind, I think that short-term traders will do quite well but long-term traders are still going to struggle in this market as it tries to make up its mind overall. I think we probably have a couple more weeks of this sideways action before anything gets decided, and quite frankly would not surprise me at all to see a very stagnant market between here and the end of the year at this rate.
After all, we have finished with the summer vacation season, and it still appears that we are doing what is essentially summer trading. We are acting more like it's the month of August, and much less like it's the month of September going into October. Because of this, the only thing we can do is trade this range until it doesn't work anymore.
