Oil markets continue to bounce around a support level as we are trying to determine if value hunting is still happening.
Crude Oil (WTI)
The Light Sweet Crude Oil market has been hanging around the $70 level, an area that is the top of the gap that kicked off after the war started in Iran. That being said, we have done a complete round trip at this point, and it suggests that we are, in fact, going to continue to see a lot of questions asked about this market.
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At this point in time, it's obvious that traders are pricing in the idea of peace. Really, there's probably more risk to the upside at this point than anything else. This is due to the fact that even if things progress in a peaceful manner, traders will probably favor the upside eventually, just due to supply chain disruptions.
Market Outlook and Technical Levels
This setup probably kicks off more of a range for the summer. The 200-day EMA offers a bit of a ceiling, and typically in summertime trading, we see sideways action. Conversely, if we see some type of panic or shock to the market, then that sends oil flying to the upside as well.
With all of that being said, I think your risk is to the upside, but I'm not looking for big moves. This is an area where you buy the dips and probably take your profit as quickly as possible. I don't necessarily think this is a market that's going to go screaming in one direction or the other without external news.
Ultimately, this is a market where going sideways is probably the most likely outcome. With that, you have to look at this as an opportunity for short-term, back-and-forth, range-bound trading while the market tries to find its footing.
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