The West Texas Intermediate Crude Oil market has broken down even further during the session on Wednesday, as we continue to see a lot of noisy behavior. The crude oil markets are pricing in the idea of a major recession, and a serious lack of demand. It was a bit surprising recently, when OPEC could not do much in the way of production cuts, so now the markets are making them pay for that.
Rallies at this point in time will continue to see resistance, especially near the $72.50 level, which had previously been supported. A certain amount of “market memory” could come into the picture at that point. If we were to break back above there, then it becomes a much messier market, but as things stand right now, it looks like the WTI crude oil market is ready to drop down to the $67.50 region.
Brent Crude Oil Technical Analysis
Brent markets have broken down significantly during the trading session on Wednesday as well, slicing through the $77 level handily. At this point, it looks like the Brent market is ready to go down to the $72.50 level, which is a recent swing low. There is a lot of noise in that area, so I don’t know if we break down below there, but Brent is also trying to price in some type of massive break down economically, and of course drop in demand. If that’s going to be the case, that’s not a good look for the overall economy.
At this point, I think it’s going to be the same thing in both grades of crude oil, you just simply sell short-term rallies to show signs of exhaustion, and that probably continues to be how the market behaves for the next several days. That being said, the Friday session does feature the Non-Farm Payroll announcement, which could throw a bit of volatility into the mix. Ultimately, this is a market that looks broken and I think it’s going to fall even further over the next several days as the bottom has fallen out of a major support level. The RSI is not oversold, so we don’t even have that.
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.