Crude Oil Forecast October 23, 2014, Technical Analysis

Like Sweet Crude

The light sweet crude market fell during the course of the day on Wednesday, testing the $80 handle yet again. This is an area that should offer significant amount of support though, so as a result we are very hesitant to start selling in this general area. We need to see a break down below the $77 level, which is extensively a fresh, new low in order to start selling again. If we do that, we would of course be very bearish and expect the market to head to the $75 level, but ultimately we believe that it’s probably more likely that we continue to grind sideways in this general vicinity for a while.

Keeping that in mind, we could bounce as high as $85 before threatening to break out, and at that point time we feel that the market would more than likely try to make the $90 level next. All things being equal though, we do have keep in mind that it is in a downtrend, so this is a market that’s deathly going to be much more comfortable on the selling side.

Brent

The Brent market fell as well during the session on Wednesday, testing the $84.50 level. This area of course has been supportive in the past, so the fact that we continue to grind sideways in this area really isn’t much of a surprise. On top of that, you have to keep in mind that the US dollar continues to strengthen and that of course will work against the value of most commodities, not just the Brent oil market. We believe that this market has a significant amount of bearish pressure at the $90 level as well, so quite frankly we feel like selling rallies will be the best way to play this market going forward.

Of course a break down below the three dollars level course in this market looking for the $80 handle next, as it is the large, round, psychologically significant support level. We see the $80 level as being very significant from a longer-term charts as well, so it makes sense that we would head there.