Crude Oil Forecast August 25, 2015, Technical Analysis

Light Sweet Crude

The light sweet crude market fell significantly during the session on Monday as almost anything of value was shunned. After all, stock markets around the world, commodities, and the US dollar got pummeled for various reasons. Without a doubt, the markets showed extreme volatility, as the opening bell around the world brought in quite a bit of bearishness.

There are a lot of concerns about whether or not the Federal Reserve will be able to raise interest rates, and that of course suggests that the economy isn’t doing as well as people have been thinking. This of course does not bode well for demand when it comes to energy, and that of course translates into lower prices in this market. On top of that, the inventory numbers last week were massively bearish, so it makes sense we continue to fall. With this, we think that the market bouncing off of the $38 level shows that we did in fact over do the selloff, but we still believe that it suggests that there will be selling opportunities on short-term charts. We sell rallies that looks soft, especially near the $40 handle.

Brent

Brent markets did much the same thing during the day, slicing through the $43 handle, and reaching towards the $42.50 level. We believe that short-term rallies in this market will also be selling opportunities as there just simply will not be enough in the way of demand around the world. The $45 level above of course is going to be resistive as it was once thought to be large, round, psychologically significant support. We believe that looking for short-term selling opportunities on short-term charts will be the way to go, and at that point in time we would be willing to short this market on any signs of exhaustion.

We believe that the $50 level will be the massive barrier above that will signify when we would be changing trend. Because of this, we are quite a ways away from being able to buy this market, so we are simply looking for resistive candles.