As far as buying is concerned, I would need to see this market take out the 50-Day EMA near the $81.50 level at the very least.
Oil prices are making great trade opportunities
The 50-Day EMA sits right around the $81.50 level and is dropping. The $80 level between here and there could also offer a significant amount of psychological resistance, so do not be surprised if that comes into the picture as well. Having said that, even though we had a nice bounce during the day, we are already starting to see some traders fade the market. Keep in mind that crude oil has sold off quite drastically, but there are multiple reasons for this.
The first one of course is going to be the fact that demand is dropping. While traders bet on a global recession, it means that crude oil will be demanded less and less. Crude oil is the “lifeblood” of the global economy, so if it’s slowing down, crude oil falls. The other reason of course is the fact that the US dollar is extraordinarily high, although it has cooled off as of late. If the US dollar starts to spike again, that could be yet another reason for crude oil to fall. Keep in mind that the end of the year means low liquidity, so we could see outsized moves based on random headlines.
The alternative scenario is that we just hang around the $75 level between now and New Year’s Day. That’s not a stretch, because quite frankly once we get through this week, there probably won’t be a lot out there to move markets until traders come back from the holiday season.
As far as buying is concerned, I would need to see this market take out the 50-Day EMA near the $81.50 level at the very least. Furthermore, I would need to see signs of global growth picking up, which of course has not been the case.
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