The crude oil markets had a slightly negative week, but we are overextended so that’s not very surprising considering that we had been so overbought. At this point, value should be something that you are looking for.
The WTI Crude Oil market pulled back significantly during the week, especially considering that we have been so bullish as of late, and this pullback flies in the face of the trend. I think this is the market trying to build up enough momentum to finally break above the $65 level, and at this point I think that a short-term pullback makes sense. I think that the $60 level underneath will be a bit of a “floor”, and that gives us an opportunity to buy oil cheaply. I’m looking for supportive candles, as it gives us an opportunity to take advantage of value that I think will present itself again. The US dollar looks as if it is going to rally in the short term, so that might be one of the catalysts.
Brent markets try to break above the $70 level during the week, but then rolled over to show signs of exhaustion. It looks like we may pull back a little further, but quite frankly just as in the WTI Crude Oil market, it is a healthy diversion. I think that the $65 level underneath is going to be massively supportive, and essentially a “floor” in the market. I don’t like shorting this market, least not until we break significantly down below there. Ultimately, I think that the bullish pressure is something that you should pay attention to, but you should also recognize that momentum cannot go on forever. This pullback offers value if you are cautious enough and more importantly: patient enough.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.