Crude oil markets have gapped lower to kick off the future session on Tuesday but then turned around a rally. It looks like we are still struggling to determine whether we are going to break down further.
The West Texas Intermediate Crude Oil market has fallen a bit at the open as we gapped lower. However, the market has turned around to show signs of life and therefore it’s likely that we continue to see plenty of downward pressure. Ultimately, this is a market that I think given enough time will have to make a decision about the $87 area, because it has offered quite a bit of support previously. The market breaking down below there opens up the possibility of a move down to the $80 level. Ultimately, this is a market that I still believe you “fade rallies.”
Brent markets have gapped lower as well, as we continue to threaten the $92.50 level. The $92.50 level has been important multiple times, and therefore it’s worth paying attention to. Rallies at this point will still have to deal with the 200 Day EMA at the $97.43 level, and I think it is probably only a matter of time before we see sellers come in and push the market to the downside.
The 50 Day EMA is above there and slowly lower as well, and it’s not too awfully far from trying to form some type of “death cross” as well. Ultimately, this is a market that I think continues to see a lot of interest, as there are a lot of concerns about the global economy slowing down, which of course will bring down demand for crude oil. The market continues to be very noisy, so you should be cautious with the position sizing, but right now I don’t see any reason to get bullish.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.