Crude Oil Forecast February 5, 2016, Technical Analysis

Light Sweet Crude

The light Sweet Crude market initially tried to rally during the day on Thursday but found far too much in the way of resistance at the $34 level to continue going higher. We have been bearish of this market quite some time, and the fact that we are forming a bit of a shooting star suggests that we are in fact going to drop from here. Keep in mind that today is the Nonfarm Payroll Number announcement, and as a result we could get quite a bit of volatility throughout the various markets around the world. This is a market that is highly sensitive to that particular announcement, even though it is a bit counterintuitive. More employment normally means more demand for energy, and that’s why there is that correlation.

Brent

Brent markets also fell, and as a result it looks as if the markets are struggling a little bit in the $36 handle. Ultimately, if we reach down from here the market should then reach down to the $32 level. If we can break down below there, then we have a little bit of momentum to work with to the downside. At that point, the market would more than likely reach towards the $28 level, which is an area that previously acted very supportive.

Short-term rallies should be selling opportunities, and with that we look at resistive candles as potential selling opportunities. The jobs number of course will greatly influence this market, so with that being the case it’s likely that the market will see quite a sizable move during the day. Ultimately though, we are in a massive downtrend in that doesn’t change until we get above the $40 level.

If we did somehow break above there, then we would have to think about buying. Until then, this is essentially going to be a “sell only” type of situation as far as we can see into the future as the demand simply is not anywhere near strong enough to start buying at this point in time as the economic slowdown continues worldwide.