Crude Oil forecast for the week of November 23, 2015, Technical Analysis

Light Sweet Crude

The light sweet crude market had a very volatile week, bouncing off of the $40 level at for support, but found the $42 level as resistance. Ultimately, this is a market that appears to be ready to go lower, and a break below $40 should send this market looking for $39, and then eventually the $35 level. However, we break above the $42 level, we feel that the market will more than likely have a massive amount of resistance as well as the $44 level. With this, we have no interest in buying but also recognize that rallies could happen. However, those rallies will continue to be selling opportunities at this point in time. We don’t see any type of buying opportunity until we are well above the $50 level, and as a result believe that the market has a massive amount of weight above it.

Brent

Brent markets initially fell during the course of the week as well, but found enough support below the $44 level to turn things back around and form a hammer. Ultimately, we could break above the top the hammer which is technically a buy signal, but we have no interest whatsoever in doing that. We want to wait to see whether or not we get a resistant candle above in order to start selling yet again. If we break below the bottom of the hammer, that is also a very negative signal, and should send this market looking at much lower levels, perhaps the $40 handle next.

As long as the US dollar continues to strengthen, it’s very difficult for the Brent market or the light sweet crude market to rally. We think commodities in general will continue to be soft, as the US dollar will demand more value in various “things.” Ultimately, we also have to keep in mind that the demand for crude oil most certainly is falling overall, as the global economy seems to be somewhat stagnant still, despite the stimulus coming out of several central banks.