The West Texas Intermediate Crude Oil market was somewhat noisy and choppy during the trading session on Monday, as we are trying to stabilize this market, or perhaps even recover a bit. The $74 level above will be an area of interest, as it was previous support, and therefore I think a bit of “market memory” comes into the picture. If we were to break above there, then you could see a move toward the $78 level. On the other hand, if we were to turn around and drop from here, the market could fall as far as the $67.50 level underneath, an area that has been massive support previously.
Either way, I think there is still a lot of concern out there when it comes to recessionary headwinds, and therefore demand for crude oil. The market has been slammed as of late, so a little bit of recovery probably makes some sense, but I still would be a bit hesitant to become bullish all of the sudden.
Brent Crude Oil Technical Analysis
Brent also fell a bit during the trading session only to find buyers. The $78 level above is an area of interest as it was previous support, and it should now be resistance. One would assume that there are going to be short sellers out there taking their profit as they start to head toward the holiday season, and therefore volume could be a bit of an issue going forward. If we do break down from here, the $72 level underneath is a significant support level.
I think this market continues to be very noisy as liquidity becomes an issue, and of course people are trying to sort out whether or not demand is going to pick up or fall from here. I do think at this point it’s likely that we see a lot of indecision, so you need to be cautious with your position sizing, but we do have a couple of levels, previously mentioned, that are worth watching over the next several weeks. I think at this point, crude oil still on its back foot, but we also have to look at the fact that the support levels underneath our longer-term support levels, so we may be closer to the end of the selling that then we had been previously.
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.