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Light crude oil has started to come pressure below the $100.00 level due to fears of a global recession, just weeks after some commodity analysts were predicting that the price of oil could surge to $200.00 per barrel.
The recent decline in oil comes on the heels of a spike in the U.S. dollar against other currencies. A stronger greenback puts pressure on the price of crude, which is traded in dollars.
Interestingly, the commodity sector has been coming under pressure from all sides recently. Copper, a major bellwether for the global economy has also been collapsing badly.
With crude now settling under $100.00, market participants are hoping that it will provide a relief from rising costs and start to push down the high CPI inflation numbers which continue to spook markets.
Going forward, a price pattern on the lower time frames is clearly predicting a drop towards the $92.00. Crude also recently bounced from its 200-day moving during this week’s price drop.
According to the ActivTrader market sentiment tool some 54 percent of traders are bullish towards crude oil, leaving plenty of scope for range bound trading in Light Crude oil prices.
Retail traders are typically on the wrong side of the trade and late to the price trend, so we should remain cautious while there is not large majority of retail traders are expecting more up or downside.
Light Crude Oil short-term Technical Analysis
The lower time frames currently show that Crude oil is losing its footing after activating a massive head and shoulders price pattern on the four-hour time frame.
The recent triggering of a large head and shoulders pattern has caused a raft of technical selling taken place on the four-hour time frame, with the measured target of the pattern located around the $92.00 level.
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Light Crude Oil medium-term Technical Analysis
The daily time frame shows that crude oil has had a huge price drop and is trading below the Ichimoku cloud for the first-time since April this year.
It should be noted that crude has also fallen back and tested its 200-day moving average and bounced. It is possible that after such a strong uptrend traders would you a pullback to the 200-day moving average as a major buying opportunity.
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