Crude Oil Forecast August 28, 2015, Technical Analysis
Light Sweet Crude
The light sweet crude markets rallied during the course of the session on Thursday, breaking well above the $40 handle. Because of this, the market looks as if it is ready to continue rallying, but we also have to realize that we are very much in a downtrend still. GDP numbers out of America of course are encouraging, and it should signify more demand for crude oil, but one has to be very careful about going long at this point. Quite frankly, there is probably going to be selling opportunities above as the markets will undoubtedly run into exhaustion. We look at the $45 level as an obvious barrier, but even before we get there we believe that the $43 level will cause resistance. However, if you have the ability to play this market with a non-leveraged ETF or something to that effect, you who are to start to consider going long. Nonetheless though, we expect that the downward pressure isn’t over.
Brent markets rallied even harder during the course of the session on Thursday, not only breaking above the $45 psychologically significant line, but the top of the shooting star that had formed on Tuesday as well. Because of this, the market should then head towards the $49 level. That is a significant barrier of resistance that extends all the way to the $51 level, so we believe that the smarter trade is to simply wait for some type of exhaustion in order to start selling again. On the other hand, if we can get above the $51 level, at that point in time we think that this market could probably be bought. We would more than likely head towards the $58 level, and then perhaps even higher.
It is interesting than the US dollar has rallied so hard during the session on Thursday while oil has as well. This tells us that this is a US centric move, and that as long as strength continues to show from America, there will be the possibility of rallies from time to time.