WTI Crude Oil Forecast: Testing Major Resistance Barrier

You need to be cautious with your position sizing as this market could have massive jumps or pivots at any moment.

The West Texas Intermediate Crude Oil market rallied a bit Tuesday as we are now threatening to $104 level. This is an area that should cause a bit of resistance because there should be a certain amount of “market memory” in the area as there has been quite a bit of support at this previous trend line as well. Ultimately, this is a market that is going to have to make a significant decision over the next couple of days.

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At this point, if we do break significantly above the trend line, it’s possible that we could go looking to reach the 50-Day EMA. The 50 Day EMA is at the $110 level, which is an area that would attract a lot of attention as well. It’s not until we break above there that the overall downtrend would be turned around, showing signs of massive momentum to the upside. In that scenario, the crude oil market could go looking to the $120 level. The $120 level is an area that has been significant resistance previously, and it does make for a significant target if we do break out to the upside.

Alternatively, if we were to break down below the bottom of the candlestick, then it opens up the possibility of a move to the 200 Day EMA. The 200 Day EMA sits at the $95 level and is rising. The $90 level underneath would be an area that we could pay close attention to, because that gives way to selling pressure, and it’s likely that the market could break down. Ultimately, at that point, the market should go much lower, as it would’ve shown a significant amount of tearing down.

This is a market that still has to worry about things like recessionary headwinds, as well as a lack of supply. As the Saudi government is not willing to pump out more crude oil, there has been a short-term boost. However, whether or not there is going to be enough demand is a completely different situation altogether. In general, this is a market that I think will continue to be noisy, so you need to be cautious with your position sizing as this market could have massive jumps or pivots at any moment.

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