WTI Crude Oil Forecast: Facing Massive Resistance - 6 December 2019

The crude oil markets have rallied a bit during the trading session on Thursday as we await the OPEC meeting results. The question now is whether or not they simply hang on to the production cuts that have been in place for so long, or do they find more in the way of production cuts that they can take advantage of. Overall, the one thing that I have noticed is that OPEC members are bickering behind closed doors and have not yet been able to agree to anything. Beyond that, Saudi Arabia has come out and said that they will flood the market with supply if somebody tries to dodge production cuts, something that happens almost every time OPEC starts to try and put them in effect.

All things being equal, the market is sitting just below massive resistance at the $60 level, which of course is a large, round, psychologically significant figure, and of course an area that has been resistance in the past. With that being the case I think that it is only a matter of time before we sell off based upon the fact that we have formed a shooting star as well, so if we were to break down below the bottom of the daily candlestick for Thursday, then I think we go looking towards the 200 day EMA and then eventually the 50 day EMA. At that point, we would be testing the bottom of the overall uptrend channel, and therefore it’s likely that we will find buyers in that area where. Otherwise, if we were to break down through there then it’s likely to send this market much lower, perhaps down to the $52.50 level, and then eventually the $50.00 level.

The alternate scenario is that the market breaks above the $60 level due to an extension of production cuts and perhaps even and expansion of them. If the members of OPEC do in fact do some type of large production cut, it’s likely that it would send the market to new highs. Otherwise, this market is primed for some type of pullback based upon the technical structure that we have, the fact that we are at the very top of the overall consolidation area. One thing is for sure, by the end of the day on Friday the news coming out of the OPEC meeting in Vienna should show itself on these charts.

Crude oil

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.