The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Thursday, as it looks like we are threatening the $75 level. However, the biggest thing they must keep in mind is that Friday is the jobs number in the United States, and therefore a lot of traders will probably try to get out of the market in general.
Looking at this chart, the 50-Day EMA has offered resistance near the $80 level, and it will be an area that market participants will have trouble pushing above. The market is likely to find that as a great shorting opportunity if we get up to that area. Breaking above it would obviously be very bullish, but I just don’t see how that happens without some type of massive “risk on rally.” Even if we were to get that, it would still more likely than not end up being short-lived, since there is a serious concern when it comes to whether we are going to get enough demand.
Looking for Exhaustion Signs
The market recently had broken out of a “falling wedge”, so there may be technical traders looking to get involved, but ultimately, I think it’s very unlikely. The market probably sees this market as one that will continue to be volatile and take the occasional punch to the face, especially as it looks like the Federal Reserve is going to continue to tighten. If that’s going to be the case, then economic conditions should continue to slow down, thereby driving down demand for crude oil. I don’t necessarily think that we are going to break down significantly from here, but I do think that rallies continue to struggle in general.
With that in mind, I look for signs of exhaustion that we can start shorting again. I don’t have any interest in buying, at least not quite yet, as the markets will see plenty of reasons to think that oil is going to remain soft, right along with the other commodity markets overall, perhaps except for gold and silver. Energy has been taking a hit on all charts, and I just don’t see how it changes. As things stand right now, fading the occasional rally every couple of days seems to work out.
Ready to trade the WTI/USD exchange rate? Here’s a list of some of the best Oil trading brokers to check out.