The WTI Crude Oil markets fell on Thursday, breaking below the $102 level. While this is a relatively negative sign, we also saw the market bounce from there, and form a hammer. This of course is a bullish sign, so therefore I feel that there are quite a bit of buyers below. Accordingly, the Wednesday candle was a shooting star, and therefore makes this a bit of a “confused” market. When I see this, the first thing I think is consolidation, and that could be what we are about to see.
As you can see on the chart I have drawn a potential ascending triangle, and that of course suggests that we are going to go higher over the longer term. In fact, I fully anticipate that and think that a break above the $105 level will come given enough time. Based upon a measure of the triangle, the projected target would be $113, giving us plenty of room to move.
Nonfarm payroll numbers.
Don’t forget that this is nonfarm payroll Friday. That means that the market will be paying attention to economic announcement, and be very volatile to say the least. With that, a lot of people will try to get information as to potential demand for petroleum based upon that number. If you think about it, it makes sense as companies hiring more employees mean that there will be more manufacturing, and the like. With that, there would be more demand for energy in general, petroleum not being any different.
On top of that, the markets will rise based upon the idea that more employees mean that more people will be out driving around, thereby increasing demand for gasoline. I think ultimately this is going to happen, but we could get a little bit of bouncing around between now and then. I will not be risking any money in this market until after the nonfarm payroll numbers come out, and more importantly the response by the market. I have no real interest in selling this market until we get below the $99 level, so therefore it’s essentially a “one-way trade” as far as I can tell. However, I will wait to see what shakes out on Friday.
