The market will continue to go lower given enough time, and I think that rallies will be thought of as opportunities to get short, and the $85 level above should be a significant resistance barrier.
Oil prices are making great trade opportunities
You should also pay attention to the fact that the 50-Day EMA is walking along the downtrend line, and therefore it’s likely that the market should continue to see a lot of resistance based upon that. If we were to break above all of that, then it’s likely that the crude oil market could go looking to the 200-Day EMA, which of course is a longer-term indicator. I think that given enough time, this is a market that will continue to see a lot of selling pressure, especially as we worry about the idea of demand.
Do not get me wrong, the market is likely to continue to see a lot of questions asked about supply, but at the same time, the markets must deal with the idea of whether the global economy is going to slow down. If it does slow down, then it’s likely that we continue to see demand drop drastically. I think that’s essentially what people have been paying attention to the most, and we may have gotten a little overdone at this point. Having said that, I’m not willing to buy this market anytime soon, and I do recognize that selling still is probably the easiest way to look at this situation.
The $80 level does cause a certain amount of noise, but we are below there. If we break down below the bottom that we just made, then it’s likely that we could send this market down to the $75 level. The $75 level course has a certain amount of psychology attached to it as well, but I think that your next target. Volatility continues to be an issue, so therefore you need to be cautious with your position size as sudden spikes and sudden falls continue to cause issues in this market for those who are trying to overleverage their positions.