The West Texas Intermediate Crude Oil market has bounced ever so slightly during the trading session on Thursday, which is a good sign considering that the market had sold off so rapidly over the last three sessions. That being said, the market is settling right around the $69 level, so it is worth paying attention to what happens next.
To begin with, the Friday session is going to be crucial due to the fact that the jobs number is coming out and therefore people will start to look at the possible demand either rising or falling right along with employment. After all, employment is one of the biggest indicators as to how the US economy is going, which of course demands crude oil if we continue to see growth. If that is going to be the case, then it is very likely that the market will continue to try to break back above the $70 level, which is also where the 50 day EMA sits. Breaking above there then opens up the possibility of reaching towards the $75 level.
On the other hand, if we were to break down below the bottom of the candlestick for the trading session on Thursday, then it is likely that we will fall in order to test that hammer that I have marked on the chart, sitting at roughly $65. If we breakdown through there, then the market is likely to go looking towards the 200 day EMA that sits just above the $60 level. Breaking below that level then of course would send this market into a death spiral.
Pay close attention to the US dollar, because the dollar rising would of course put downward pressure on crude oil under most circumstances, due to the fact that the contract is of course priced in those same US dollars. The exact opposite is true as well, if the US dollar starts to fall off it is likely that the crude oil market will rally as it would be a major “risk on” type of move. Either way, I think the one thing you can probably count on is that the market will be very choppy to say the least, as the market has found itself making a “lower high” but have not made a “lower low” quite yet. The question then will be is this trending volatility, or is it something bigger?
