The WTI Crude Oil market fell slightly during the session on Wednesday, pulling back from the $95.00 level, an area where you would expect to see a significant amount of resistance. That being the case, I believe that this market will continue to grind lower, although I’m not necessarily looking for any type of significant sell off at this point in time. The pullback makes sense, because it is a large, round, psychologically significant number, and of course we are in a decent downtrend.
The candle is in exactly impressive though, after all it is fairly small and its range. This is another reason why don’t think we have the momentum to break down at this point, and we are simply drifting lower over time. Think of this is a slow grind lower, probably testing the $90.00 level given enough time, which of course is a major round number, and is a significant amount of support on the longer-term charts.
Strong trend, should continue.
As far as I can see this is a strong trend, and there’s no reason whatsoever that it shouldn’t continue. However, there is a significant amount of support at the $90 handle, so I’m not looking for any type of meltdown as I said earlier. Instead of trying to short the futures market flat out, I actually prefer to sell the Canadian dollar as a proxy, as we saw a nice hammer form in the USD/CAD pair. On top of that, I believe that plane CFD and options markets are probably going to be the best way to deal with the WTI market. The volatility will be rather drastic, so what I have been doing is selling options that are deep out of the money. Granted, you only get a small amount of premium, but at the end of the day it is a fairly reliable trade in a market that seems pretty range bound with a slightly downward bias. Nonetheless, I think this fairly quiet market should continue the downward pressure, ultimately making this a “sell only” market if you’re going to risk any serious amount of money.
