Crude Oil Forecast August 21, 2014, Technical Analysis

Light Sweet Crude

The light sweet crude markets tried to rally during the course of the day on Wednesday, but gave back about half of what it accomplished. The $96.00 level above is rather resistive looking, and the fact that we could not get above there suggests that perhaps the market should continue to go lower. After all, the candle is a shooting star and with that being the case a move back down below the recent low should send this market looking for $92.00 level, and then the $90.00 level. With that, we believe that short-term bounces could be used to sell this market again. With that, we think that the market will continue to be more short-term friendly, as it will be difficult to discern a longer-term trend. Getting below the $90.00 level is almost impossible, as we believe that it is a massive support region based upon the large, round, psychological significance of the number.

Brent

The Brent market had a positive session, and actually kept most of the gains. Because of this, it appears that we could bounce a bit from here, probably looking for the $103.50 level as resistance that we could sell off of. Otherwise, expect to see significant resistance at the $105 level as well, and therefore we’re not ready to serve buying until we get above that area. Above there, the market could go to the $107 level which would be a return to a previous consolidation area.

On the other hand, a resistant candle has us selling this market and aiming for the $100.00 level which of course is a large round number. That being the case, we believe that a bounce of rather significant proportions could be found down there. If we break below that handle, that would be absolutely horrible as the market would be completely broken at that point. We believe that the market does have significant bearish pressure in it though, so we are much more comfortable shorting over the course of the next several sessions as we believe that the oil markets will continue to soften.