Crude Oil forecast for the week of October 20, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market fell during the week as you can see, testing the $80 handle. That area offered quite a bit of support though, but as you can see we bounced quite drastically from that area in order to form a nice-looking hammer. With this hammer, it appears of the market is in fact going to perhaps go higher at this point in time, but we need to break above the $86 level in order to do just that.

Looking at this chart, it’s very possible that a break above the six dollars level since this market looking for the $90 level, and possibly even higher than that. If we pullback from here, it’s very possible that there will be buying opportunities on short-term charts below as well, as the $80 level continues to be the “floor” in this marketplace.

Brent

The Brent markets fell as well, slamming into the $83 level below and finding support. The market bounce from there and closed at roughly $86, and as a result it appears of this market is probably going to remain fairly soft. The market certainly seems to have quite a bit of resistance at the $90 level as well, as it’s very obvious as a round, psychologically significant number. With that, we believe that short-term traders will probably do better in this marketplace, selling rallies as they appear.

Looking at the shape of the candle, it isn’t quite a hammer, and as a result that is why we believe that this market will continue to sell off as the bounce was fairly tame. I also believe that we will then head down to the next significant support level on the longer-term charts, the $80 level as far as we can tell. With that, we do believe that softness continues in this marketplace, but we have to also recognize that we are approaching dangerously oversold areas any marketplace that has completely fallen off of a Cliff recently. Going forward, we would expect some type of wicked bounce, but it does look like we have it quite yet.