Crude Oil Forecast August 26, 2015, Technical Analysis

Light Sweet Crude

The light sweet crude market broke higher during the course of the session on Tuesday, testing the $40 level. The $40 level of course is a large, round, psychologically significant number, so it does make sense that the market would struggle to get above there. After all, we are in a very strong downtrend at this point in time, and as a result it’s difficult to imagine that everything is going to change at the drop of a hat. We believe that a little bit more of a rally could be had, but we also recognize that there is a significant amount of resistance at the $43 level as well. We believe that resistive candles will be selling opportunities, and we will treat them as such. We are not ready to start buying at this point in time.

Brent

Brent markets tried to rally as well during the day, but found a significant amount of resistance at the $45 level. With that being the case, the market looks as if it is continued to struggle as the daily candle was a shooting star. With this, the market looks as if it is going to continue to sell off, and a break down below the bottom of the shooting star has us reaching towards the $40 handle. With this, it’s very likely that the markets will continue to sell off every time we rally, and as a result we are looking for resistive candles on short-term rallies in order to sell again and again. We believe that the markets could rally a little bit from here though, as it is certainly an oversold the situation. Ultimately though, it’s only a matter of time before the sellers step in and take advantage of “value” in the United States dollar. With this, I think that it’s only a matter time before we do reach towards the $40 handle, and with that we should see continued bearishness. Quite frankly, the demand for crude oil at the moment is extraordinarily soft, thereby offering no real reason to get bullish at this point in time.