Crude Oil forecast for the week of October 27, 2014, Technical Analysis

Light Sweet Crude

Believe sweet crude market fell during the course of the week, as we continue to see quite a bit of bearish pressure in this marketplace. That being the case, it’s obvious for us that the US dollar will continue to drive this market lower. However, the $80 level below is rather supportive, and a large, round, psychologically significant number. That of course is a barrier that we will have to contend with, but there is nothing on this chart that doesn’t suggest it’s possible.

If we bounce from here, we think that the sellers will step back in and push this market down as well, so therefore we have no interest in buying at this point in time because any bounce will more than likely just be a bit of a “dead cat bounce”, meaning that the sellers will almost certainly step in and reassert their control.

Brent

Brent markets went back and forth during the course of the week as well, but ended up forming something along the lines of a hammer. Because of this, we could get a little bit of a bounce but let’s be honest here: the market is oversold at this point in time, so that would be a huge surprise at this point in time with the sellers being so aggressive recently.

At the end of the day though, we believe that the next major support level is closer to the $80 level, so any bounce from here will more than likely just bring in more sellers as people will look at it as an opportunity to get involved in the market yet again. That being the case though, you can see that we have broken down significantly over the last several months, so the move has been a bit aggressive and more than likely will struggle to continue with the same tenacity that it has seen. With that, we believe that waiting for a bounce that show signs of resistance or failure will be the way to go going forward.