I think we will continue to see a lot of noisy behavior more than anything else so short-term trading probably is the best way to go.
The size of the candlestick is somewhat notable, as we have seen a pretty significant selloff, losing almost 5% during the day. Rallies at this point still look to be very suspicious at best, so I look at this as a “fade the short term rally” type of market. This is unless, of course, we get some type of shift in the attitude of the market. Until that’s the case, it’s likely that we will continue to see a lot of downward pressure, and it may only be a matter of time before the recession is going to causes traders to focus more on a lack of demand.
Because of this, it’s likely that we will continue to see a lot of trouble to get above the $100 level. That being said, if we were to break above the $100 level you would have to recognize that is the first serious shot across the bow for the bears. I don’t think that’s going to be the case though because we continue to see a lot of trouble out there. I believe that it is only a matter of time before we break down. If we break down below the $90 level, then it’s possible that we could go to the $80 level underneath.
On the other hand, if we were to break above the candlestick from Friday, that gets this market to the $105 level above. At this point, the 50-day EMA is starting to raise down to it, so that could set up for a nice fight. There is concern out there about the lack of demand but at the same time, there are also concerns about supply. In other words, I think we will continue to see a lot of noisy behavior more than anything else so short-term trading probably is the best way to go.
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