Crude Oil Forecast October 27, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market had a slightly negative session during the day on Friday, but continues to grind away in the same area that we have been in for some time now. Because of that, it appears of the market is not ready to really make up its mind yet, but that makes sense of course considering that we are sitting just above the $80 handle. The $80 handle of course will be supportive based upon the fact that it is a large, round, psychologically significant number, and the fact that it has Artie proven itself to be supportive.

We believe that the $84 level is the beginning of for the significant resistance, so therefore we are not interested in buying this market even if it does bounce from here. It could lead to short-term selling opportunities, but beyond that we really don’t see much in the way of an opportunity to trade this market for anything more than a short-term smash and grab type of situation.

Brent

The Brent markets did much the same during the session on Friday, falling from the $87 level. Because of that, it appears that the market should continue to pressure the downside as we believe ultimately this market will then go down to the $80 handle. That area we think is a larger term support area, and will of course attract more in the way of buying pressure also. It this market does rally from here, we believe that there is a significant amount of resistance at the $90 level as well, and because of that it’s going to be very difficult to start buying the right market anytime soon. If we do break out to the upside, we believe we could bounce as high as $97, but that seems very unlikely at this point in time.

We believe that the market will challenge $80 given enough time, but that area will bring on a new fight. Nonetheless, the strengthening US dollar is doing no favors for the price of most commodities, this one included.