Despite concerns over noise and gap-filling, crude oil is rallying, even in light of lower inflation.
The West Texas Intermediate Crude Oil market has rallied in recent trading sessions, although there is still a lot of noise just above the 200-Day EMA. While the market has recently gapped higher, it has not yet turned around to fill that gap, indicating that there may be a lot of volatility ahead. Remember, the initial cause of the gap was OPEC+ announcing a 1.6 million barrel per day cut, but this was due to a lack of demand, something that should show itself sooner or later.
Investors are focusing on the fact that CPI numbers were lower than anticipated in the United States, leading many to believe that the Federal Reserve will cut interest rates sooner rather than later. This has pushed prices higher, but it remains to be seen whether this trend will continue.
While the market will eventually have to fill the gap, it doesn’t look like it will happen in the short term. This presents a situation where short-term traders can look to the upside, with prices possibly reaching $85. However, if an exhaustion candle appears, prices could fall back toward the 50-Day EMA and fill the gap.
- Brent is also rallying, although it is still below the 200-Day EMA.
- If prices break above this level, it could trigger a rash of buying and push prices toward the $90 and $95 levels.
- However, like WTI, Brent has a lot of noise surrounding it, and there is a gap underneath that will eventually need to be filled. While not necessarily 100%, the fact is that futures markets do tend to pay close attention to these gaps.
Despite concerns over noise and gap-filling, crude oil is rallying, even in light of lower inflation. This suggests that the economy may be slowing down enough for the central bank to take action. However, with no signs of this happening soon, investors should remain cautious and look for signs of exhaustion in the market.
Overall, both WTI and Brent markets are expected to see a lot of volatility in the coming weeks. While there are opportunities for short-term gains, investors should also be mindful of the potential for a pullback and the eventual filling of the gaps. With careful analysis and strategic planning, investors can navigate these markets and capitalize on opportunities as they arise.