Crude Oil Forecast August 19, 2015, Technical Analysis

Light Sweet Crude

The light sweet crude market fell initially during the course of the day on Tuesday, but found enough support to turn things back around and form a hammer. In our opinion, this market is starting to find a significant amount of support near the $42 level, which of course isn’t a huge surprise at this point in time, mainly because it was so supportive in the past. The last time we tested the $42 level, we bounced all the way to the $60 handle next. With this, we have to wonder whether or not market memory won’t come into play, and pushes market higher.

We believe that a break above the $43 level probably sends this market looking for $45, and then eventually $47 after that. We are not necessarily looking for a long-term trend change, just a reaction to this significant level. The downtrend is a little bit “long in the tooth”, and as a result we believe that a bounce would be very healthy.

Brent

Brent markets continue to grind a little bit lower during the session on Tuesday, but quite frankly we believe that this is a market that desperately needs a bit of a bounce. That gives people the opportunity to step back into the market and start selling again, which at this point in time would be a bit risky as we have basically been in a freefall for a couple of months. We believe that a bounce is a selling opportunity at higher levels, and we will use those bounces as that opportunity. We believe that the $52 level above is resistive, and as a result we would love selling a resistant candle in that region. We think that the market could very well drop to the $45 level given enough time, and with that we remain bearish. On the other hand, if we could break above the $55 level, that could change our opinion overall. Keep in mind that the summertime is about to come to a close, and big-money comes into the marketplace at that point in time, quite often setting up the trend for the next several months going forward.