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Pay attention to the uptrend line underneath, which is currently at roughly $105
The West Texas Intermediate Crude Oil market has found Monday to be rather quiet, which makes sense considering it was Juneteenth in the United States, and this of course had a major influence on the futures markets. That being said, we had a massive selloff on Friday, and one would have to believe that there is still a little bit of a hangover from that breakdown. Because of this, I think it is probably only a matter of time before we see a little bit more downward pressure, I think it’s short-term at best.
Pay attention to the uptrend line underneath, which is currently at roughly $105. The market breaking below that level would be a significant signal that perhaps the uptrend line is giving way, and we could go down to the 200 Day EMA, currently sitting at the $95 level. That being said, I do think that there are buyers between here and the uptrend line, so we need to see a little bit of stabilization on a full day in order to build the confidence to go higher again. Yes, this has been a vicious selloff, but ultimately it is yet just another selloff in a market that is volatile, to begin with.
The 50 Day EMA was pierced on Friday, so recapturing that would be a good sign, and that could bring more buyers into the market as well. Crude oil rallying from here more likely than not will go looking to test the $120 level, perhaps even higher than that. Longer-term, I do think that we have further to go, especially as the demand for crude oil will continue to pick up due to a lack of drilling during the pandemic. However, there are concerns about the economy slowing down, so that of course is something that will have to be paid attention to as well. In other words, think this means that we are going to have a very volatile market, but that can be said about almost every market that I follow, so I see no reason why oil would be any different.
Keep your position size reasonable, because we could see sudden moves. You can always add as the position goes in your favor, which is the way you should be trading markets anyway.
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