WTI Crude Oil Forecast: Is Testing a Major Trend Line

• The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Friday, as we are now slicing through the 50-Day EMA and testing the $80 level.
• Further making this interesting is the fact that it is also a neckline and inverted head and shoulders, so I think now we could go to where the 200-Day EMA if that does in fact kick-off.
• After all, you need to pay close attention to the idea that the world is starting to look at the idea of Chinese demand pushing the market higher, and that could make everything fall into place here.

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Do not get me wrong, I’m not overly bullish on crude oil, I just recognize that the market could turn around at this point, and a lot of people are looking at the idea of China over the opening, which of course can have an influence on where we go next. If we do pull back from here, perhaps wiping out the bottom of the Friday candlestick, then we can see the market drop down to the $77 level. After that, then the market could really start to sell off at that point, perhaps reaching down to the $75 level.

Be Cautious With Your Position Size

Regardless, I think you are going to see a lot of noisy behavior, and therefore a situation where you need to be cautious with your position size. However, if we do break above the $82 level, then I think at that point you start to look at the possibility of a potential trend change. Therefore, this market is so important to pay attention to in the short term, because it could lead to a big longer-term move. Because of this, I will keep an eye on this market, because even if I choose not to trade oil, will have a significant influence on the Canadian dollar, the Norwegian krone, etc.

Another thing that could help this market go higher is if the US dollar continues to soften. That being the case, you should keep an eye on the fact that Monday is a holiday in the United States, so liquidity will be an issue at certain points in the day. Because of this, I will probably just observe any changes for the next trading session.