Crude Oil Forecast Today 02/05: Bounces After Selloff -Chart

(MENAFN- Daily Forex)

• The CL contract initially plunged overnight but has seen a lot of buying pressure into the market as we had pressed an area that potentially could have been thought of as a major support area.
• All things being equal, this is a market that I think should be looking to find some type of bottoming pattern here, and it's also possible that the market participants will continue to question whether or not the global economy can continue to strengthen.
• With that being the case, the market is going to remain very noisy, and as a result, I think you have to be very cautious with your position sizing.

Technical Analysis

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Do not get me wrong, the technical Analysis for this market is pretty dreadful at the moment. However, there is an area right around the $56 level that seems to be massive support, so, if we can break below that area, it would obviously change a lot of things. On the other hand, if we turn around and rally, I'd be watching the $60 level for a major potential barrier. Anything above the $60 level would show true strength, and it would more likely than not take some type of headline to get the markets going. As things stand right now, I think that people are still expecting some type of apocalypse, and that obviously has a negative influence on what people think that demand for crude oil will end up being.

I would expect a lot of choppy volatility, but I would also pay close attention to the idea of position sizing being the only thing that you can truly control. After all, we have seen a lot of volatility, and it is going to take quite a bit of a different attitude for the markets to get rid of that fear that we have seen be such a major factor. Ultimately, this is a market that's looking for a bottom. You should remember that Friday is Non-Farm Payroll, which is a major mover of risk appetite as well.

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