Crude Oil Price Analysis: 200-Day EMA Rejection Signals Weekend Gap Danger

WTI Crude Oil Technical Analysis

The light sweet crude oil market gapped higher to kick off the trading session, bounced enough to touch the 200-day EMA, but then turned around. At this point, I think the oil market is likely going to be one that’s going to be volatile due to the headlines coming out of the Middle East. Unfortunately, the biggest driver at the moment doesn’t necessarily seem to be supply and demand, at least not directly. It’s the latest headlines coming out of Tehran and Washington, D.C.

The 200-day EMA offering a little bit of resistance makes a certain amount of sense from a technical analysis standpoint, but really, this is a scenario where traders are more worried about what’s going to happen in the Strait of Hormuz than anything else.

So, with this, it will be very headline-driven. Technical traders may see this as a potential falling wedge, a bullish sign. We’ll see. The $70 level underneath had been support, so that’s worth paying attention to also.

Brent Crude Oil Technical Analysis

The Brent market also gapped higher. It actually pierced the 200-day EMA and reached toward the $85 level, but failed just shy of there. Turning around the way it has suggests more of the same kind of confused market behavior.

The biggest problem that most traders, at least in my opinion, are going to face is that pretty much anything can happen over the weekend, and unfortunately, that means Monday could be a huge gap in either direction. So, the volatility and danger of the market dictate caution, even more so than usual. Position sizing is something that traders always pay attention to, but in this particular market is very likely to be paramount. The market has been very volatile over the last couple of months, but right now, we’re right around that 200-day EMA, which is basically a neutral level from a longer-term perspective. The $85 level has been a bit of a magnet as of late, so I’ll be watching that as well.

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