Crude Oil Forecast May 9, 2016, Technical Analysis

WTI Crude Oil

The WTI Crude Oil market initially fell during the course of the day on Friday, but found support at the $44 level as we turned back around. The market certainly sees quite a bit of support just below, so it’s not a big surprise that we would bounce, especially during the Nonfarm Payroll Friday session. After all, the jobs number missed again, and this means that we will more than likely continue to see loose monetary policy out of the Federal Reserve. That in turn knocks down the value of the US dollar, which means it takes more of those dollars to buy a barrel of oil.

However, there is a lot of noise between here and the $50 level, so even if we do rally from here it is going to be choppy at best. We look to short-term trades to the upside in order to profit from this situation in the meantime, I would be very quick to take profits.

Brent

Brent markets initially fell during the session on Friday as well but found enough support at the $44 level to turn around and form a hammer. The hammer was preceded by a shooting star, so there will be quite a bit of volatility in this area. The market should continue to consolidate between the $44 level on the bottom, and the $48 level on the top. Between now and then, we will be looking to buy short-term rallies and pullbacks and show signs of support. The market should continue to be very choppy in this area, because we have seen a lot of historical action just above.

If we break down below the $44 level, we will more than likely try to find support at the $42 handle. We look at that as value still, and are not prepared to give up on the rally until we break down below the $42 handle, and possibly even the $40 handle. If the US dollar continues to fall in value over the longer term, that of course will continue to accelerate the move to the upside here.