Index Bounces from 200-Day EMA

I think in the short term, we are more likely than not going to continue to go sideways, but keep an eye on how big movements behave, and whether or not we break out of this area.

• The West Texas Intermediate Crude Oil market pulled back significantly Friday to show signs of negativity,
• We are sitting at the 200-day EMA and have bounced from there significantly.
• By doing so, the market has been showing signs of life, and it’s likely that we could continue to see a bit of a fight in the short term.
• If we can break above the top of the candlestick, then it might show continued pressure.

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Breaking Down Below Friday’s Candlestick

If we break down below the bottom of the candlestick for the trading session on Friday, then it opens up a wave of selling. This could happen due to the fact that there are a lot of concerns when it comes to demand as the recession is almost certainly on the forefront of people’s minds. The market breaking down below there opens up the possibility of a drop down to the $90 level, which is an area where I would anticipate a little bit more support as well. If we get that out, it’s likely that the market goes much lower, perhaps crashing toward the $80 level after that.

If we do rally, I think the $100 level will be the first target, followed by the $105 level. It’s worth noting that there was a previous uptrend line in that area, and it could offer a little bit of “market memory.” With that being the case, it’s likely that a bit of exhaustion could show up in that region as well. However, if we break above there, the market likely goes looking to the 50-day EMA which is at the $110 level. Keep in mind that crude oil is all over the place due to the fact that there are a lot of crosscurrents out there that we need to keep in mind.

I think in the short term, we are more likely than not going to continue to go sideways, but keep an eye on how big movements behave, and whether or not we break out of this area. Once we do break out, then momentum will probably pick up, driving the market rather quickly in short order. This is essentially going to be an argument about whether there will be enough demand as markets around the world are trying to process the idea of recession.

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