Crude Oil Forecast January 11, 2017, Technical Analysis

Crude Oil daily chart, January 11, 2016
Crude Oil daily chart, January 11, 2016

WTI Crude Oil

Traders are starting to focus on the oversupply issues with the crude oil market again, as evident by the failure to rally on Tuesday after a significant sell off on Monday. By doing so, this makes the Crude Oil Inventories number vital today, and could be the catalyst to much lower pricing. It seems as if the market will ultimately try to reach towards the $50 handle below, so I am bearish. I believe that short-term rallies could offer short-term selling opportunities but I also expect a lot of noise in the market between now and reaching that level. Because of this, the oil markets will not be for the squeamish anytime soon. Rallies present opportunities to short again and again as far as I can see. If we can break down below the $50 level, that would make things much more sustainable for the sellers.

 

Brent

Brent markets initially tried to rally during the day on Tuesday but gave up all those gains relatively quickly. Because of this, we did up forming a bearish candle that looks like it’s trying to tell us of the market is going to reach towards the $53 level. That’s an area where I would expect to see quite a bit of support, but there is a lot of noise between here and there as well. In other words, although I recognize that this market will probably retain its bearishness, it’s difficult to imagine that it can to be an easy move down to the $53 handle.

If we did rally from here, after the bearish candle for Monday, I would anticipate that the sellers will get involved and it could offer a selling opportunity from higher levels of the first signs of exhaustion. Because of this, I am bearish of this market and recognize that a move below the $53 level would only lead to an acceleration of the selling that we have seen recently. A strengthening US dollar will of course work against the value of oil as well, so keep that in mind.

Brent daily chart, January 11, 2016
Brent daily chart, January 11, 2016
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