The crude oil markets that I follow here at FX Empire are both doing the same thing, which is to say they are testing the lower end of the range that they have been in for some time. At the end of the day, I suspect it will remain so.
The West Texas Intermediate Crude Oil Market has fallen a bit during the early hours on Friday as we continue to see a lot of noisy behavior. That being said, this is a market that will almost certainly stay range bound, so don’t expect to see it fall apart. So, because of this, I think you’ve got a situation where traders will be looking for some type of bounce that they can start buying, at least for the short term. The $65 level underneath is a major support level, while the $72.50 level above is a major resistance barrier.
The Brent market looks very much the same, as we are stuck in a range bound market yet again. So with the situation being as it is, I’m paying close attention to the $70 level underneath, as it should offer a bit of a floor. If we rally from here, it’s worth noting that each successive high has gotten a little bit lower. So that’s the one red flag that I see on the charts, but it wouldn’t surprise me to try to make a bounce towards a 50 day EMA or possibly even the $76 level.
Both grades of oil are waiting to see what the demand is going to be, because quite frankly, demand is not as high as it once was. Furthermore, with a Trump administration coming into the United States, one would have to assume that more drilling is about to happen in the USA.
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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.