The West Texas Intermediate Crude Oil market has been very volatile over the last couple of days, and at the beginning of Thursday, we did see some selling. That being said, the market is seemingly respecting the 50 Day EMA, as that is where we, the market, have seen buyers come back in. The candlestick for the trading session looks as if it will form a hammer. If we break above the top of the candlestick, then it is likely that the market will go to the $110 level. The market also has a downtrend line that coincides with that level.
The market is breaking below the 50 Day EMA could send this market down to the $100 level, which is where the uptrend line from the triangle resides. The market continues to see a lot of volatility, but ultimately it seems as if we are still trying to figure out where we are going more extended term. As we continue to compress price action, it means that a nurse is building up in the market, and it is possible that we could have an explosive move in one direction or the other.
Keep in mind that a couple of different things seem to be moving the crude oil market more than anything else, including the disruption of the Russian supply. That drives prices higher, but at the same time, we have to wonder whether or not there is going to be demand going forward, as it looks like the global economy is slowing down. The volatility will continue because there are a lot of questions in both directions.
Adding more volatility to the market is that the US dollar continues to grind higher, which suggests that we are going to have downward pressure on oil, although that does not necessarily have to be the case. Both can rise at the same time, but if the US dollar spikes rather quickly, that is generally a sign of fear in the market, which for the most part, has people looking away from commodities such as oil, which are typically thought of as a “risk-on” type of profile. Either way, as long as we stay between these two lines, it will probably be a situation where you do a lot of short-term range trading.
