The WTI Crude Oil markets were obviously closed for the Christmas holiday, but as you can see the markets have been hanging about the $99 level recently. Because of this, I feel that this market is trying to break out, but we could get a little bit of a pullback in order to gather momentum for that move. Ultimately, I believe that we will eventually trying to reenter the consolidation area between $101, and $104 at the top. Any move into that area will be hard-fought, but as we have seen so much momentum build to the upside recently, it would not be surprising.
As far selling is concerned, this market should have plenty of support all the way down to the $96 level, where there is a gap that got blown through recently. That of course is a very positive sign, and because of that I feel that the buyers are now in control of this market. That’s not to say that pullbacks will happen, quite frankly I do see them is nice buying opportunities.
Holiday liquidity, or a lack of.
The biggest problem right now is going to be the fact that there simply won’t be any real liquidity in this market. This will probably be the case for about two weeks, and as a result only small positions should be played, and small moves be expected. Ultimately, I think this market will finally break out to the upside, but it could be as late as the second week of January. Quite frankly will come down to how the market “feels” one traders come back from the holidays, but I believe that towards the end of the year we started to see a lot of bullishness in risk assets across the board. Because of that, oil should follow suit given enough time.
Nonetheless, I would recognize that a move below $95 would be very bearish. Until then though, I simply cannot sell this market as we have broken out so strongly to the upside. Unless you are a very short-term trader though, this market probably won’t offer much for the next several sessions.
