[ad_1]
In general, this is a tough time to be trading crude oil.
- The West Texas Intermediate Crude Oil market was all over the place during July
- August probably has more of the same in store for traders.Â
- There are a lot of concerns when it cmes to the economy, which obviously has a major influence on what happens with oil.
Grappling with the $100 Level
Ultimately, the market is going to continue to struggle with the $100 level, as we are trying to figure out whether or not the US dollar will continue to be a major wrecking ball when it comes to the value of commodities, not to mention the fact that there are a lot of concerns when it comes down to whether or not there’s going to be enough demand. In an environment where the global economy could be slowing down, then the demand for crude oil will drop right along with it.
From a technical analysis standpoint, it’s worth noting that we are sitting just above the 50-week EMA, but just below a previous uptrend line. That might be a clue, as we have broken through enough in the way of trendlines where there is certainly a lot of selling pressure. The question also comes down to the possibility of whether or not we are going to see enough supply as well, as several OPEC countries have decided that they were not going to increase production, so at this point, we are going to see the supply/demand equation get very interesting.
At this point, I am looking at this through the prism of a breakdown through the 50-week EMA. If that happens, then it’s likely that we will continue to go lower, reaching down to the $80 level. I think it’s very likely that we have seen the highs for the year, so I suspect that at best we have sideways action for the month of August, perhaps even more of a “fade the rally” type of scenario. If we recapture the previous uptrend line, then you can make an argument for a bit of a recovery. That being said, I think the next couple of months will remain very volatile, so position sizing will be crucial in order to keep your account somewhat safe. In general, this is a tough time to be trading crude oil.
Ready to trade our monthly WTI forecast? Here are the best Oil trading brokers to choose from.
[ad_2]