Lack of demand is a very real possibility, as it looks like we are ready to test whether that theory holds.
The 200-Day EMA is somewhere near the $92 level, so we can break above there it’s likely we could reach the $95 level in that case. Breaking above the area, then we could go looking to the $100 level. The $100 level obviously has a huge psychological influence in it, so it would be a huge fight just waiting to happen. Breaking above the $100 level would kick off a much bigger move to the upside, perhaps allowing oil to go to the $120 level.
On the downside, if we were to break down below the $84 level, I think it opens a move down to the $82.50 level. After that, then you have the $80 level. All things being equal, we should see plenty of support in that area, but it also makes quite a bit of sense that we would see buyers appear. However, if we were to break down below there, then we could drop down to the $75 level. The $75 level being broken would send this market much lower.
Keep in mind that the market is trying to figure out whether we are going to focus on a lack of supply, or if we are going to focus on lack of demand. Lack of demand is a very real possibility, as it looks like we are ready to test whether that theory holds. Ultimately, I think the one thing that you can probably count on is a lot of noisy behavior, so there’s no real need to fight the range that we are in right now. As things stand, I suspect this range holds until we get some type of clear-cut signal. Once we do, we could see a move of about $20 in either direction, but the key here is going to be keeping your position size reasonable due to all the volatility.
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