WTI crude oil forecast: testing at the bottom of the triangle
The West Texas mid-market crude oil market slumped significantly during Thursday’s trading session to test the bottom of an ascending triangle. The previous candles for most of the week have been hammers which suggest there should be plenty of buyers below. Ultimately, looking at this chart, although we did degrade quite significantly during the trading session, it should be noted that we bounced back a bit from an uptrend line.
The 50 day EMA is also just below the uptrend line, so it only makes sense that we are seeing a lot of buyers in this neighborhood as well. Because of this, I fully anticipate that we will see buyers pull back in sufficient time, as markets are still trying to get long due to the ‘reopening of trade’ and the idea that demand for crude oil will pick up as the world continues. continues to see inflation and of course the savings asking for more. The US dollar has been going down for some time, so if this continues to be the case, crude oil will rebound a bit as well.
On the upside, the $ 67.50 level should be a resistance area, and if we can break above it, it is likely that the market could turn to the $ 70 level above. This is a large, round, and psychologically significant number that a breakout to the upside would bring in even more money, as it is likely that we would see more dynamic players returning to the markets. On the other hand, if we were to fall below the 50 day EMA, chances are we could move towards the $ 60 level. I doubt that will happen, but it’s something we need to pay close attention to.
Based on the ascending triangle, it is likely that we could go looking towards the $ 75 level though, based on the “measured movement” from the height of the triangle. All else being equal, I have no real interest in shorting oil anytime soon, unless of course the whole narrative of reopening trade changes. I don’t see this happening in the short term, especially as the inflation numbers start to accelerate which should continue to drive the value of the currency down as people buy “things”.