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Forex pairs in this Article » CRUDEOIL

The WTI Crude Oil markets fell during the session on Tuesday, slicing through the $104 level, an area that we had suggested was significant support. That being the case, I feel that this market is going to continue to fall at this point. This will be especially true if the Federal Reserve minutes that are released later today suggesting that quantitative easing is in fact going to be tapered off of. This should increase the value of the US dollar, and that of course should drive down the price of commodities, with the WTI contract being no different than other commodity markets.

With this in mind, I think that this market could be a decent sell at this point in time. Granted, you will probably want to wait until after 2:30 PM New York time to place that trade, simply because you never know what the Federal Reserve will say. However, it does look like the market is ready to finally pull back, something that it's needed to do for quite some time.

Crude OIl Price July 31

$99 is a significant support level.

I believe that the $99 level is a significant support level below, but it probably starts at the $100 handle. In other words, if you do it by shorting this market, you should probably try to get out of it somewhere closer the $100 area as it should offer a significant profit, but should get you out of the market before any significant bounce. After all, it is roughly the 61.8% retrace of this rise in the market, which of course is a natural supportive level.

Going forward, I expect the market to bounce from there, I think that will be very difficult to push the market down below that area, unless of course the Federal Reserve comes out and specifically states that it's going to taper off in a larger amount than anticipated. Barring that, I think we are looking at a nice pullback in a market that will trying to reestablish a range somewhere near the $100 level. The real question of course is where will the top of that range be?

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