The WTI Crude Oil markets fell during the session on Wednesday, falling farther than I honestly thought they would. The $92.50 level of course has been significant support recently, and the nice well-defined consolidation area has been violated. Because of this, I think that the market looks like it wants to go lower, but looking at the longer-term charts, I see a lot of noise between here and the $90.00 level. With that being the situation, is very difficult to short here, even though the market certainly looks like it wants to fall.
On the other hand, it is difficult to buy this market at the same time. The candle is somewhat of a hammer, but the fact that we broke down below that supportive level suggests to me that the sellers still have the upper hand. This market looks like we could bounce back into the consolidation area, but quite frankly, the market has been sold off so hard that I believe rallies will be sold into, and resistive candles are probably what you should be looking for.
Federal Reserve still controls the oil markets.
The Federal Reserve and whether or not he can taper off of quantitative easing will directly affect the value of the US dollar, which of course will directly value of commodities in general. Oil of course is no different, and this particular market is going to be highly sensitive to it as it is primarily used in North America.
I believe that this market rallies at this point time, the $96 level will be an area that sellers could come back into the market and push price back down. Resistive candles in that area would probably be the easiest market signal to take, as I would be selling at that point. Even though this market looks like it could continue lower, I will actually avoid shorting this market until we get some type of bounce. If we do not, I might sell calls in the options market in order to take advantage of premium that would be paid for those positions.
