The WTI Crude Oil markets fell hard during the session on Monday again, testing the $91.50 level. This area has been significant support in the past, and as a result it’s probably going to be a bit difficult to sell right here. However, you certainly can’t buy just because the markets bounced here before. Waiting for some type of supportive candle might be the way to go, but quite frankly I feel that more than likely the so-called “writing is on the wall.”
I believe that the market will break down shortly, and probably aim for the $90.00 level. That area is a significant amount of support on longer-term charts as well as being a large, round, psychologically significant number. Because of this, I believe that a lot of buyers will step into the market at that point on the chart.
Less than impressive jobs numbers brings questions of demand to the market.
It’s hard to imagine that the United States will have a massive amount of demand for energy in a situation where employment is so poor. After all, in December the country added only 74,000 jobs. This was a bitter disappointment considering that the market was looking for somewhere near 200,000 or so. As long as the employment picture looks week in the United States, will more than likely undermine any rallies that we see in the petroleum markets.
On top of that, the Friday candle of course was a shooting star, which suggests that there was a significant amount of selling pressure after that nonfarm payroll number. Because of this, it just feels that the market is kind of “heavy” at the moment. That being the case, my preferred trade is actually some type of short-term rally that show signs of weakness. Using the short-term charts might be the way to go going forward, perhaps simply taking small positions and taking little pieces of profit out of the market as opposed to trying to make a significant amount on one particular trade. After all, the markets have been somewhat choppy here and there, but at the same time the market fell for simply precipitously a couple of weeks ago, and therefore could be thought of as slightly oversold.
