Crude Oil Forecast August 31, 2015, Technical Analysis

Light Sweet Crude

Light sweet crude market broke higher during the course of the session on Friday, as the extreme positivity continued in this market. The $45 level was broken to the upside, and we ended up pressing up against the $46 level. If we can break above $46, this market will more than likely try to reach the $50 handle again. By doing so, the market would find itself testing serious resistance. A move above there and we could be looking at the beginning of a longer-term trend change.

Having said that though, we feel that selling is still the easiest thing to do. If we get a resistant candle, or better yet again an exhaustive one, we would be sellers. We believe that the downward pressure is still very much in effect, but the last couple of days have certainly shut the markets up.

Brent

Brent markets rallied as well, clearing the $50 level. The candle of course is a very strong, and follows and even stronger one for the session on Thursday, so having said that it appears that there is a significant amount of bullish pressure underneath. However, we have a longer-term downtrend that has most certainly been in control for quite some time. Having said that though, we have been oversold for a minute here, so we believe that the rally is something that you need to do in order to continue the downtrend.

At this point in time though, this could bring in the ability for people to go long simply because of the fact that the markets may have gotten a bit ahead of themselves. The United States GDP numbers came out stronger than anticipated, so some people are starting to bet on the idea of increased demand. Truthfully, this is a market that looks like it may be trying to figure a few things out, so at this point in time it’s likely that volatility will be a major component of this market. If we break above the $52 level we will then argue for the $55 level. Above there, then you would have to think that the trend changed.