[ad_1]
At this point, we have not broken out of the triangle, so I believe all traits have to be thought of as more or less a potential range-bound type of situation.
The West Texas Intermediate Crude Oil market initially tried to rally on Tuesday but gave back gains as we started to see more negativity around the world. The oil market has been bouncing around in a triangle for a while, so it does make a certain amount of sense that we continue to test both sides of it. That being said, we are racing toward the uptrend line, which could bring a lot of noise into the picture.
If we break down below the uptrend line, then it is likely that oil will continue to dive, reaching towards the $95 level, and then eventually the $90 level. I do not have much interest in trying to guess when or if we break down below this uptrend line. I will simply wait for some type of a daily close outside of this triangle to place my next longer-term trade.
It is worth noting that we broke below the 50-day EMA, but it is not the first time that we have since we have formed the triangle. In other words, although it is a negative turn of events, it is not necessarily one that I am overly concerned with. The market will continue to be one that is very noisy, due to the fact that there are so many confusing and conflicting inputs. The overall global economic picture is one of inflation, and perhaps a slowdown, both of which could cause problems for the oil market. If demand drops due to the economy slowing, then obviously there is a problem here. On the other hand, there are concerns about a lack of supply due to the Russian oil that is not hitting the markets. Adding more angst to the market is the fact that so much time had been spent not drilling during the pandemic.
The market breaking above the highs of the trading session on Tuesday would be a very bullish sign, perhaps opening up the possibility of a move back to the $110 level, which coincides with the downtrend line above. At this point, we have not broken out of the triangle, so I believe all traits have to be thought of as more or less a potential range-bound type of situation.
[ad_2]