Crude Oil Forecast October 3, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude markets fell during the course of the day on Thursday, slicing all the way down to the $80.50 level. However, we managed to bounce significantly from there, showing a massive hammer. The hammer of course signifies that there is quite a bit of support below the $90.00 level, therefore we think that the market will probably go higher from here. On a move above the $91.00 level, we would be buyers, aiming for $93. We could go even higher than that, as the top of the consolidation area is actually at the $95 level.

We have no interest in shorting this market until we get below the bottom of the hammer, and as a result we are looking to buy at the moment. However, if we did break down below the bottom of that hammer, that would of course be a very negative sign.

Brent

The Brent markets did something somewhat similar, but did not bounce as significantly as the light sweet crude market. Because of that, it appears that the market is going to continue to drop from here and most certainly underperform the light sweet crude market. The candle looks as if it’s one that’s trying to show signs of support, but hardly with any enthusiasm. Because of this, we will continue to short this market every time it rallies, at least until it gets above the $97.50 level, which is a significant amount of resistance.

If we do get above there, the market would then head to the $100 level, but quite frankly we don’t see that happening anytime soon. In fact, we are much more comfortable being short of this market than being long, and might even possibly wait for some type of longer-term supportive candle in order to buy this market. The $90 level below is probably going to be the next target, as it is a large, round, psychologically significant number and tends to attract orders overall. We’ve gotten no reason to think that the trend is going to change anytime soon, so $90 is our overall target.