The West Texas Intermediate Crude Oil market rallied on Wednesday, as we continue to bounce back and forth in a consolidation phase after selling off quite drastically. That being said, we are also starting to get the so-called “death cross”, when the 50-Day EMA breaks down below the 200-Day EMA. Nonetheless, that is a negative indicator that is quite often late. Because of this, the market is likely to ignore it mainly due to the fact that it is not only unreliable, but it is also a market that is focusing on what OPEC is doing.
OPEC is more likely than not going to cut production soon, now markets will have to pay close attention to them. After all, the market has seen quite a bit of speculation that the market is going to witness a lack of demand, but if we take more supply out of the equation, that certainly could lift pricing. It’s worth noting that we have been consolidating between $79 and $72.50 recently and are approaching the top of that range.
Brent Crude Oil Technical Analysis
Brent markets also have rallied slightly during the beginning of the Wednesday session, but I think it is probably only a matter time before it has to make a bigger decision. With that being said, the market is likely to continue being very noisy, but if we were to break above the $84 level, it could send this market much higher. In that environment, we could go to the $90 level. Underneath, I would anticipate seeing the light of support, extending down to the $78 level. Whether or not we can break out remains to be seen, but OPEC cutting drastically would probably do the trick.
That being said, if OPEC cuts drastically and the market doesn’t jump, that would be a horrible sign. We are still consolidating, and you need to look at it through that prism. With this being the case, you need to be cautious, but recognize that the market will continue to be very choppy and therefore keep your position size reasonable along the way. Once we break out of this consolidation area, then we can start to put on a bigger position.
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.