October 20, 2022 [DailyForex] – I think the crude oil situation is going to come down to whatever it is we are focusing on for the moment.
The West Texas Intermediate Crude Oil market has initially fallen during the trading session on Thursday, but has found support just above the $85 level, which of course has a certain amount of psychology attached to it. Furthermore, we have seen this area offer both support and resistance in the past, so it’s obviously an area of contention.
If we were to break down below the $85 level, I could send the crude oil market lower and perhaps even significantly so. At that juncture, I think you have a situation where the market would collapse and quite frankly, we would probably see an extraordinarily strong US dollar while traders are worried about the overall global economy slowing down. This would fly in the face of OPEC cutting 2 million barrels per day, which of course is something that it’s worth paying attention to.
- Looking at the technical analysis, you can make an argument for a bullish flag being formed, which of course the entire world will be paying close attention to. If we break above the 200-Day EMA, that could open the possibility of not only the flag kicking off, but an overall uptrend.
- Breaking above the 200-Day EMA and firing off the bullish flag suggests that we could have a move to the $102 level, or so.
- This obviously would fly in the face of what we had seen for a while, but as you can see, we have recently broken out of a significant downtrend and now we have come back to retest the top of it.
I think the crude oil situation is going to come down to whatever it is we are focusing on for the moment. Sometimes, we focus on the fact that there have been massive cuts to the supply, but at the same time, there are plenty of days out there that we are worried about the global slowing.
This is a very difficult and choppy market, so therefore you need to use a lot of your money management skills, because getting overly aggressive at this point could be a great way to lose money. I believe that regardless of which direction we had, it is going to be extraordinarily choppy so therefore you need to be very nimble or use very small positions if you choose to trade this market.