Crude Oil Forecast October 20, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market tried to rally during the session on Friday, but has seen the $85 level as been very resistive. The shooting star that form for the Friday session suggests that we are going to drop a little bit from here, probably testing the $80 level again. However, you have to keep in mind that there is a hammer on the weekly chart, so we do not expect a break down below the $80 level as the market tries to find its footing down here.

On the opposite side, if we can break above the $86 level, we feel that the market could go back up to the $89 level or so. That being the case, we could have a short-term rally but at this point time it’s very difficult to imagine the trend is suddenly going higher without significant trouble.

Brent

The Brent market went back and forth during the session on Friday, essentially proving nothing. The market looks as if it’s ready to try to break out to the upside overall based upon the candle on Thursday, but really we think that the longer-term charts suggests that we are going to go down to the $80 level, as it is a large, round, psychologically significant number. We believe that a break above the $90 level could send this market looking for the $97 level, but right now it seems a bit difficult to do so as the market certainly has quite a bit of bearish pressure on it. However, looking at the chart it’s not hard to imagine that we might be a bit oversold at this point in time.

We believe that selling short-term rallies will continue to be the easiest way to profit in this market as the Brent market continues to look very soft overall. Quite frankly, if the market goes higher from here, that just simply gives us an opportunity to sell from higher levels. At this point time, we don’t really have any interest in buying this market currently.