(MENAFN- Daily Forex) The West Texas Intermediate Crude Oil market rallied significantly to reach towards the 200-day EMA. The 200-day EMA attracts a lot of attention, and it is probably worth noting that the market had stopped there during the previous session. Crude oil was particularly vulnerable to hedge fund liquidation as it was one of the biggest positions a lot of them owned, so as fear of omicron took hold of market behavior, it was almost like a feedback loop. At this point, the market is likely to continue seeing plenty of value hunters though, especially as we are testing multiple areas of support.
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The first thing that catches my attention is that we had formed a massive hammer at the $65 level, which also happened to be where the uptrend line crossed. During the Friday session, we tried to recapture a lot of the momentum, but failed at the 200-day EMA. At the time of writing, it looks like the 200-day EMA could very well be broken, and if we can continue to go higher, perhaps breaking above the $70 level, then I think it will be a rush back into this contract.
After all, it does look as if the omicron variant is not going to be as dangerous as once thought, and perhaps some of the initial overreaction may get worked against. Short-term pullbacks at this point in time will probably continue to find buyers, as this looks like a significant bottoming pattern, especially as people realize that perhaps not much has changed. While OPEC did decide to go ahead and increase production as per schedule, the reality is that if the market continues to reopen, that will almost certainly demand more crude oil . I think that is probably what's going on here, so every time it pulls back it is very likely to attract not only value hunters, but maybe small positions by myself. I will be adding as we go higher, as it could very well be a bigger move towards the $75 level. The 50-day EMA sits just above there, so would make a certain amount of sense that it could offer a nice target or perhaps even a short-term ceiling. If we break down below the bottom of the hammer from the Thursday session though, that could open up fresh selling in a leg lower. At this point though, it looks oversold.
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