The WTI Crude Oil markets fell during the session on Monday, but found enough support right around the $101 level in order to form a nice looking hammer. This hammer suggests that the market will find buyers in the general vicinity, and perhaps return to the larger consolidation area that it had been in previously. I believe that this market will more than likely work its way back towards the $108 level, but do recognize the fact that there is a lot to chew through between here and there.
With that being said, we are more than likely going to see buyers stepped then above the $104 level, and I think there is a bit of psychological resistance in that general vicinity. A lot of this will be dictated by the value the US dollar obviously, and therefore that market has to be watched as well.
Federal Reserve and economic growth
This market is being driven by the Federal Reserve at the moment, and the fact that they did not taper off of quantitative easing. While initially this was a dollar negative scenario, people began to wonder whether or not there was economic growth, which of course would have a massive effect on the demand for crude oil. On the other hand, if economic growth is doing better outside the United States than in it, then there would be demand, just not in America.
The biggest problem with this of course is the fact that the United States seems to be doing just as well if not better than anyone else. Because of this, I believe that this market is going to stay in a consolidative type of manner simply because nobody really knows what's going on. Also, I know that it's extremely simple to say this but the truth is that a consolidation range simply works until it doesn't. That's the theory in this particular case, and the fact that we are starting to see hammers does in fact suggest that there is enough support down here to do something to the upside.
