The West Texas Intermediate Crude Oil market rallied a bit on Wednesday to show signs of life again. We have broken above a very long neutral candlestick during the previous session, so that is a very bullish sign as well. In this scenario, it looks like we will continue to go higher, perhaps reaching towards the $75 level over the longer term. Furthermore, the 50-day EMA is sitting underneath just below the $70 level and sloping higher. In other words, there is momentum starting to pick up to the upside going forward.
Underneath, the $67.50 level offers support, so it is not until we break down below there that I would be looking to short this market, and the candlestick during the trading session on Wednesday has suggested that we have plenty of buyers underneath. That being said, this does not necessarily mean that we are going to continue seeing momentum, but perhaps we could grind a bit to the upside. After all, a lot of traders out there are looking at the supply crunch that a lot of people are claiming.
OPEC has recently suggested that there would be an increase in demand, so it is likely that we could see higher prices. In fact, most of Wall Street is expecting that exact same scenario, meaning that there will be quite a few buyers out there waiting to pick up every time we drift lower. In fact, it does not look like we are anywhere near being bearish at this point.
That being said, if we did break down below the $67.50 level, then I suspect that this market will fall apart quite drastically. I do not necessarily expect that to happen, but in that scenario, I would anticipate that the market could go down to the 200-day EMA which is near the $63 level. The $63 level recently has been supportive from the most recent bounce, and it would attract a lot of attention. That is the least likely of scenarios and would need some type of catastrophic event to make the market fall apart. At this point, I anticipate that most traders are going to continue to look at this through a prism of value, and will take advantage accordingly.
