(MENAFN- Daily Forex)

• The WTI Crude Oil market has shown itself to be slightly positive on Friday, but quite frankly we are not hanging onto the bulk of the gains, and we are most certainly in a very negative trend.
• In other words, the fact that we are giving back some of the gains suggest that we could very well be a situation where we are looking to“fade the rally” in this market again.

Technical Analysis

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Keep in mind that the $65 level continues to be important from both a psychological standpoint, and of course from a“market memory” standpoint. It's an area where we have seen a lot of support and resistance previously, and we do have the 50 Day EMA sitting right there as well offering resistance. If we can break above there, then the market is likely to take off toward the 200 Day EMA. On the other hand, if we reach their and show signs of exhaustion, I have no issues whatsoever in shorting the crude oil market , because there are a lot of things working against it. On a break down below the $62 level, it's likely that WTI Crude will drop to the $60 handle

Keep in mind that oversupply is going to continue to be a major issue here, as OPEC, Russia, and the United States are all producing massive amounts of crude oil at the moment. In fact, OPEC is set to add another 500,000 barrels to the market next month, meaning that it's going to be very difficult for crude oil to hang on to any pricing power. This isn't to say that we are suddenly going to fall apart and that crude oil is going to zero, but it wasn't that long ago we had major issues with storage capacity, driving the futures markets to negative numbers. While I don't necessarily look for that, we certainly have seen what this oversupply of crude can do to trading houses who find themselves suddenly on the hook to take delivery of something that can't store. I think oil has plenty of headwinds at the moment.

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