Crude Oil Forecast February 21, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude markets had a slightly negative session on Thursday, but continues to hover right around the $103 level. That area proved to be a bit sticky Wednesday, so it makes sense that perhaps the market wants to hang about this general vicinity. Also, you have to look at the fact that we have been in a fairly strong uptrend for some time now, so a potential consolidation area in this general vicinity isn’t much of a surprise either.

After the impulsive candle that we saw during the session on Tuesday, we believe that this market will ultimately go higher as the market continues to show underlying strength. In fact, we find it very difficult to sell this market right now, and believe that any pullback at this point in time should simply be a nice buying opportunity. We also believe that the $100 level will be a massive “floor” in this market going forward.

Brent

The Brent market fell during the majority of the session on Thursday, but had enough support just above the $109.50 level to bounce and form a nice-looking hammer. That hammer suggests that the market is going to go higher, and as a result we think that the market is still going to target the $112 level that we had mentioned a few sessions ago. The ability to break above the highs from the Wednesday session is what we will need to see in order to start buying again. However, we think that is in fact what’s getting ready to happen.

There is an alternate scenario though, as we believe the $109 level is going to offer a bit of a “floor” in this market, so any type of supportive action down near that level would be a buying opportunity as far as we can tell. Either way, we have no scenario in which we sell this market anytime soon as there has been so much bullish activity. In fact, it appears that all energy markets that we follow are being well supported at the moment.