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Forex pairs in this Article » CRUDEOIL

The WTI Crude Oil markets fell during the session on Friday again, plunging below the bottom of the hammer from Thursday. Normally, this would be a very bearish signal but you can see that we bounced off of the $104 level, an area that simply had to hold for the buyers. This being the case, I feel that the market still has plenty of buoyancy and as a result I think this market will more than likely continue higher.

That's not to say that there isn't any danger in this market falling. Why frankly, if we managed to break down below the $104 level on a daily close, it would not surprise me to see us hit the $99 level. But, at this point in time it appears that the buyers are willing to step in every time this market dips. If we do get a move higher, I suspect that we will go any higher than the recent high at roughly $109. This is mainly because the $110 level will have a significant psychological impact, and more than likely bring in a lot of sellers.

Crude Oil Chart July 29

Remember, it's the Federal Reserve that controls oil prices

The Federal Reserve currently seems to be going back and forth as to whether or not they are going to taper off of quantitative easing. If they do, this will strengthen the US dollar, and should absolutely pummel the price of oil. Recently though, there have been serious doubts expressed as to whether or not they could do this in the month of September as originally planned, and if that's the case we should see the Dollar lose value, pushing the market up as far as oil is concerned.

That being said, I think that we will see consolidation between here and the end of next month, when larger traders start to come back into the marketplace, and at which point time we should have a better read on what the Federal Reserve may do during the September meeting. Until then, expect extreme amounts of volatility as traders try to figure out the next move.

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