- The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Friday, to reach the $75 level.
- The $75 level is an area that has been important more than once, and therefore it makes sense that a certain amount of “market memory” has shown itself.
- By pulling back from there, it does show that even though there has been a little bit of a short covering rally, it does not stick, and there’s a lot of information in that.
If we break down below the bottom of the candlesticks for the last couple of days, it’s likely that we could go down to the $70 level. The $70 level is a large, round, psychologically significant figure, and makes for a nice target. On the other hand, if we turn around and break above the $75 level, then we could go looking to the 50-Day EMA, which is near the $80 level. It has been dropping and will offer a significant amount of resistance as we have seen multiple times, and it’s probably worth noting that the area between the 50-Day EMA and the 200-Day EMA continues to be very resistive, and therefore it’s likely that we will continue to see a lot of downward pressure.
Oil Could Fall Further
Keep in mind that the crude oil market is currently struggling with the idea of overall demand, as the global economy is slowing down. You should also keep in mind that the WTI market does tend to reflect mainly the United States and North America, but when you look at the other grades of crude oil around the world, they all basically look the same as if there is a serious lack of demand and that’s probably going to be the main driver of what happens over the next year or so. In fact, if we do head into a global recession, we could see oil fall much further than you anticipate.
Beyond that, you can also make the argument that the Biden Administration has recently depleted the Strategic Petroleum Reserve to buy votes, but now that the elections are over, they will have to step in and purchase to replenish that supply. That might offer a certain amount of support over time, but where exactly that is, we don’t know yet.
Ready to trade our WTI Crude Oil Forex? We’ve made a list of the best Oil trading brokers worth trading with.