Crude Oil Forecast August 17 Technical Analysis

Light Sweet Crude

The light sweet crude market had a very interesting day on Friday, as we broke down and tested the $40 level. We bounced significantly though, and formed a hammer. The hammer sits just above the $42 level, so at this point in time we have to begin to wonder whether or not we aren’t going to get a significant bounce. After all, the $42 level was massively supportive in the past, and even sent the market looking for $60. At this point in time, you have to wonder who’s left to sell this market, and of course you have to recognize that liquidity is a little bit of an issue as we are still in the height of vacation season for most traders. Once we break above the top of the candle, we could see this market going to the $45 level first, and possibly even higher than that. If we broke the bottom of that hammer though, that would be horrifically negative.

Brent

Brent markets went back and forth during the course of the session on Friday, testing the $49 level for support. Any rally at this point in time should be sold on signs of resistance, but we recognize that a move above the $51 level may end up sending this market looking for $54 next. If we break down below the recent low, the market will probably head to the $45 handle, but just as we see in the light sweet crude market, we believe that perhaps the market starting to get to be far too oversold in order to feel comfortable selling.

Pay attention to the US dollar, as it will have a massive effect on it what happens in the Brent market. The US Dollar Index still looks relatively positive, but it is starting to chop around a little bit, which could give the Brent market a little bit of a reprieve. At this point in time though, we are not expecting massive moves, so stick to short-term charts and sell short-term rallies that show signs of exhaustion for the next week or two.