- Crude oil prices are facing resistance near $62 after a volatile week.
- Despite renewed sanctions on Russia, supply routes remain intact.
- The analyst sees limited upside and potential for shorting on signs of exhaustion.
The light sweet crude oil market has found itself a little bit noisy in the early hours of Friday, and now it looks like we are starting to run into a significant barrier in the form of $62. The $62 level is an area that has been important multiple times, and it’s worth noting that the previous resistance is now at least starting to try to act as resistance again. You can see it has been resistance, support, resistance, and support.
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All things being equal, this is a market that, if we can break down below the bottom of the candlestick for the trading session, opens up a move down to the $60 level, possibly even down to the gap a couple of days ago. Keep in mind that the sanctions on Russia have sent this market higher, but let’s be honest—there have always been sanctions on Russia. Although perhaps more aggressive this time, the reality is that, despite the Chinese and possibly the Indians backing away from purchases of Russian oil in theory, Russian oil still finds its way to the European Union. That’s not going to change, so the dance and the game continue.
Most larger market participants understand this, and therefore, I look at this as a potential selling opportunity. I certainly wouldn’t chase oil all the way up here. I do think that if you get the opportunity, you are probably looking for some type of signs of exhaustion where you can start shorting and pushing towards the bottom again. As far as buying is concerned, I think you’re a little late for this. We had a massive gap higher on that announcement, and now the knee-jerk reaction is over. We’ll see the true colors of this market.
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