(MENAFN- Daily Forex) The West Texas Intermediate Crude Oil market rallied significantly on Wednesday to reach towards the $72.25 level. That being said, there is a significant amount of resistance just above extending to the $73 level. That is a major area of selling pressure, and you can see that we have struggled to get above there multiple times. The 50 day EMA is sitting at the $74 level and sinking lower, so I think it will probably come down in order to offer significant resistance as well.
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At this point, I am simply waiting for some type of exhaustion to start shorting, unless we go ripping to the upside and clear the 50 day EMA on a daily close. If we did, then I think oil could go looking towards the $79 level. That is where we saw a massive selloff in this market, so I think there should be a lot of resistance just waiting to happen.
To the downside, the 200 day EMA sits at the $69.38 level. That area could be support, but if we break down below there then it is likely we will go looking towards the bottom of the hammer from the Monday session, which is where I would anticipate seeing a lot of support. I think we are simply going to bounce around in this area that could be significant support and resistance heading into the end of the year. Keep in mind that liquidity will be a major issue, due to the fact that the lack of trading volume could cause major issues and I think that the most important thing you can do is keep your position size relatively small, due to the fact that a sudden headline or huge position closing could throw this market around.
Ultimately, this is a market in which I think I will be looking for signs of exhaustion that I can start fading. That is my most favored trade, but it is very unlikely that we will get a huge move other than some type of reaction to a thin situation. I think that if you can employ some type of range-bound system and show a bit of patience, you should do quite well.
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