Crude Oil forecast for the week of February 1, 2016, Technical Analysis

Light Sweet Crude

The light sweet crude market initially fell during the course of the week but turned back around to form a rather supportive looking hammer. The hammer of course is a bullish sign, and as a result it’s very likely that we will see buying pressure going forward. Because of this, we are waiting to see whether or not we can break above the top of the hammer in order to try to reach the $40 level, although we are not longer-term buy-and-hold type of traders. Having said that though, there is a significant amount of support just below and with that being the case it is difficult to short this market until make a fresh, new low which doesn’t look very likely at the moment. However, we do not think that oil is certainly changing trend though, it is far too bearish.

Brent

Brent markets initially fell during the course of the week, but turned back around at the $30 level to form a nice-looking hammer. The hammer of course is a very bullish sign and the fact that we formed one the previous week suggests that we are going to get a bit of a bounce here as well. I also believe that there is quite a bit of resistance above, and it’s almost impossible to imagine going long at this point for any real length of time, but the fact that we bounced suggests that perhaps we are bit oversold, something that wouldn’t be very difficult to imagine.

Going forward, we fully anticipate seeing lower prices, but at this point in time it’s difficult to imagine that there is enough momentum to continue to pushes market lower. Ultimately, we think that the $50 level is essentially the “ceiling” in this market, so we could go as high as there, but we be very quick to take any profits on a long position as we are most certainly in a downtrend overall. Ultimately, we believe that short-term the weekly chart will look positive, but eventually the sellers will come out in full force.