Crude Oil Forecast January 16, 2017, Technical Analysis

WTI Crude Oil

The WTI Crude Oil market fell slightly on Friday, but we remain in the middle of a larger consolidation area. I see this consolidation as $50 on the bottom, and $55 on the top. Because of this, it’s likely that the market will continue to be volatile and choppy, and thus I think that you will have to employ some type of that range trading strategy. I am a buyer closer to the $50 level, and a seller at the $55 level. However, you have to keep in mind that the weekly candle was a hammer, so that does suggest a perhaps the buyers are starting to exert a little bit more influence. If they can get above the $55 level, we will then reach towards the $60 handle. Ultimately, this is going to be very bumpy ride, seeing I should deal with a lot of volatility.

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Brent

The Brent markets initially fell during the day on Friday, but found enough support underneath to turn things around and look a little bit more supportive. The market should then go to the $50 level above which is massively resistive. If we can break above there, the market can go much higher, but in the meantime, I think we are essentially range bound in the Brent market as well. The $53 level underneath is massively supportive, so I believe the buyers will return every time we get close to that area. Given enough time, we will have to make a decision, but in the meantime it looks like the market isn’t quite ready to do so. Keep an eye on the US dollar, that tend to have an influence on the oil markets as well, so if the US dollar goes higher it could provide a little bit of a headline. Regardless what happens, you’re going to have to be able to deal with the choppiness of a market that is making serious longer-term decisions between production cuts and overproduction scenarios. Oil markets will continue to be the focus of a lot of trading, and therefore very difficult to navigate.