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WTI Crude Oil Forecast: Attempting Stabilization – 18 July 2022

Keep your position size reasonable due to the volatility.

The West Texas Intermediate Crude Oil market has rallied a bit Friday as the 200-day EMA continues to offer a bit of dynamic support. At this point, you should also pay close attention to the idea of the indicator offering support, as well as the hammer from the Thursday session showing signs of life. At this point, the market then looks as if it is going to threaten the $100 level above.

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If we were to break above the $100 level, then it’s possible that the market could make an attempt to get to the $105 level, which is an area we had sold off from previously. It’s worth noting that the previous uptrend line has been important multiple times, so if we were to break above all of that, then you could see the market continue the overall uptrend. That being said, the market is going to continue to have a lot of noise around it, not the least of which is the fact that we may be heading into a recession.

While we have seen crude oil markets shoot straight up in the air due to the war in Russia, there is concern about supply because of the lack of exploration and drilling during the pandemic, and the fact that we have reopened the economy after so little use. In other words, demand is surging. However, if we are going to see a massive recession, then it’s likely that demand could fall apart. Because of this, I think we have a lot of questions to ask about the market, and therefore the fact that we are stuck between the 200-day EMA underneath and the 50-day EMA above makes quite a bit of sense.

Keep in mind that the US dollar also has a part to play, and it has been strengthening quite radically. The dollar has given back some of the gains of the last couple of days, and that has corresponded quite nicely with the price action in this chart. That being said, if we were to turn around to break down below the hammer from the Thursday session, that could bring in a fresh leg of selling and quite a bit of momentum. Keep your position size reasonable due to the volatility.

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