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MENAFN- Daily Forex)
Every time we rally, there seem to be sellers willing to get involved and start pushing prices lower. The crude oil market continues to be noisy as we see more of the same. Every time we rally, there seem to be sellers willing to get involved and start pushing prices lower.
The crude oil market faces a lot of headwinds at the moment, not the least of which would be the fact that the United States is pumping out crude oil in massive quantities never seen before, and at the same time, countries like Guyana are joining the fray.
Despite the fact that there are sanctions on Russian oil, the reality is that Russian oil still finds its way to the marketplace, and therefore, we have a scenario where there is far too much oil for demand at the moment. While this is good for economies and having cheap energy, the lack of demand is a function of some economies slowing down.
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From a technical analysis standpoint, it's easy to see that a downtrend line and the 50-day EMA sitting just above that could cause some headaches, and I do think that's eventually one of the things that you have to look at any time this market does rally.
In fact, I have favored shorting this market every time it starts to rally and shows signs of exhaustion, and I think that will more likely than not continue to be the way forward. The $55 level is a hard floor at the moment, so I don't necessarily think that we break down below there, but I also recognize that there's no real, genuine reason to be very bullish on crude oil at the moment.
In fact, it's not until we break above $60 that I even begin to have a different conversation about this market. Ultimately, this is a market that I think offers a lot of opportunity for short sellers, but it is going to be more of the short-term type of setup that you will be looking at, not necessarily anything for a big swing trade. Friday will be a shortened holiday session, and therefore, you have to keep in mind that after we open back up from the Thursday holiday, price action might be a little stagnant.
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