Crude Oil Forecast October 29, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude market rose slightly during the course of the session on Tuesday, finding the $80 level as support. That being the case, the market looks as if it’s ready to continue consolidating, as the market should continue to go sideways overall. That being the case though, we recognize that the $80 level is a large, round, psychologically significant number. That being the case, the market feels as if it wants to bounce here, but we believe that there will continue to be bearish pressure somewhere near the $84 level, and it is not until we break above $85 that we would signify think that the market should go higher, perhaps as high as $90. Quite frankly though, it’s likely that the market should continue to break down below the $80 level, but we need to build up enough momentum in order to do so. With that, short-term buyers will probably continue to push the market around, but ultimately we do expect a breakdown.

Brent

The Brent markets did very little during the session on Tuesday, continuing to grind around the $86 level. That being the case, the market looks as if it’s ready to consolidate and ultimately should continue to see this market sell off every time it tries to rally, especially as the US dollar continues to gain momentum and value, which effectively makes commodities cheaper in general. On top of that, it almost looks as if are trying to form some type of bearish flag, which of course is a very bearish sign. Ultimately, the $80 level is probably the target as it is the large, round, psychologically significant number below, and is an important level on the longer-term charts.

We believe that bounces will simply be an invitation to sell from higher levels but do recognize that the $90 level been broken to the upside probably sends this market looking for $97 before finding sellers yet again. Because of that, the market is one that we are much more comfortable shorting than going long of, and will continue to approach it as such.