By FXEmpire.com
The light sweet crude markets fell at first during the session on Tuesday as the Federal Reserve Chairman’s testimony wasn’t explicitly pro-quantitative easing. This would’ve disappointed many of the traders out there that were looking to gain from potential commodity inflation. However, by the end of the testimony the market had suspected that he did in fact lay the groundwork for the possibility of further easing.
With that being said, the $90 level still looms large as resistance in this marketplace. The area has to be broken above, and more importantly a daily candle printed above that level, in order for us to get overly bullish at this point in time. In fact, we see the resistance area as running all the way to the $91 level, and as such we may even wait until a break of that level.
With the tensions going on between Iran and the rest of the world at the moment, and it is very possible that we will see a spike in oil prices. As for supply and demand, there is no real demand to speak of in terms of global outlook, and as such we suspect that any spike will probably be somewhat short-lived.
It is with that short-term duration that we look at these charts and consider a breakout to be more than likely just a run to the $100 level. Once that is said and done, it would take something rather bullish for this market to continue much higher. More than likely, it would take either massive Federal Reserve easing to push markets much higher than that particular level. As for the downside, this market will certainly have some bearish pressure on them from a supply and demand standpoint, but we think that the current situation makes it very difficult to sell as tensions run high in the Persian Gulf.
In order to sell, we need to see a break below the $84 level which should send this to the $78 level. If we get below $78, we think this market could fall much, much further.
Click here a current Crude Oil Chart.
Originally posted here
