WTI Crude Oil Forecast: Showing Signs of Hesitation

I believe that the market is going to continue to favor the downside, but it’s never a 100% certainty as to what the Federal Reserve is going to do.

• The West Texas Intermediate Crude Oil market initially tried to rally on Tuesday but gave back gains as we got a little bit too close to the $100 level.
• The market is also far too close to the 200-day EMA, so it’s likely to see a lot of noisy behavior.
• We have the Federal Reserve meeting on Wednesday that is going to have a major influence on where we go next when it comes to risk appetite, so we need to pay close attention to how the market behaves the van.

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Hammer Formed

Looking at this chart, it’s worth noting that we ended up forming a bit of an inverted hammer, which is a potential negative sign. Ultimately, this is a market that I think if we break down below the lows of the previous session on Monday, we could go much lower. In that scenario, the market is likely to go down to the $90 level, where we had bounced from previously. That being said, if we were to break down below the $90 level, it’s likely that we go much lower, perhaps even down to the $80 level.

Alternately, if we were to break above the $100 level, then it’s possible that we could go looking to the $104 level, where we had fallen from the last time we tried to recover. That being said, I think a lot of this is going to come down to the idea of whether or not the Federal Reserve is going to remain very tight with monetary policy, perhaps kicking off some type of recession.

In a recession, it does make quite a bit of sense that we would see a lack of demand for crude oil. I think that’s a lot of what’s going on right now, as the market is likely to continue to see a lot of confusion, as you can make an argument for both a recession and a lack of supply. I think we will continue to see a lot of back-and-forth and confusion, to say the least. I believe that the market is going to continue to favor the downside, but it’s never a 100% certainty as to what the Federal Reserve is going to do. Because of this, keep your position size reasonable.

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