Crude Oil Forecast October 22, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market initially tried to rally, but found a significant amount of resistance at the 84.00 level in order to form a hammer after we fell back down. There has been a bit of back and forth action over the last several sessions, and as a result we believe that this market will continue to be very difficult to navigate for anything more than a scalp, thereby making it one that we do not want to risk a lot of money in.

If we bounce from here, we believe that the market will struggle at the 85.00 handle, and that the resistance runs to the 86.00 level. Above there, the next major resistance barrier is found at the 90.00 handle, and we would be aggressively short at the area if we do get a resistant candle in that overpriced region. Beyond that though, we are a bit leery about been involved in this market simply because the 80.00 handle below is obviously a major spot on the chart, and as a result we feel that this market will continue to go back and forth on short-term charts.

Brent

The Brent markets initially tried to rally during the session on Tuesday, but found the 86.50 level to be a bit too resistive, pushing the market back down to form a shooting star. The shooting star sits right on top of the 85.00 handle, an area that of course is a large, round, psychologically significant number. With that, a move below the 85.00 level would more than likely send this market looking to the 83.00 handle as its next target. That was the most recent low, and of course we believe that there should be a significant amount of support in that region.

However, looking at the trend you can certainly see that it’s probably only a matter of time before the 83.00 level breaks down below in order to push this market down to the 80.00 handle. Because of this, we feel that the Brent market will continue to be sold off, and therefore remain bearish.