By FXEmpire.com
The light sweet crude market fell again during the relatively quiet Tuesday session. The market has recently failed an attempt to break above the $90 level, and it does appear that we are currently forming a range in this market. The $80-$90 level is an area that we believe this market will continue to bounce around in until we get some type of larger catalyst from a macroeconomic sense.
The 85 level is of course somewhat reactive; as it had been resistance previously but has now been slice through enough times that we have to look at it as a minor level. The major ones of course are the above-mentioned $80 and $90 levels, and it will take a breakout of this range in order for us to get involved in this market from a longer-term perspective.
Going forward, we suspect that many economic drivers will be out there to move this market in one direction or the other, with the Iranian situation being more and more important. As the Iranians continue to threaten to close down the Strait of Hormuz, the potential for a sudden spike still exists. However, this is probably one of the least likely scenarios to play out in the near term. This is going to more than likely be a period of Iran trying to gain more time and order to continue with its nuclear ambitions. Obviously, if there is any armed conflict in the region at all, oil will absolutely check out.
For the time being, it would take a break below the $78 level in order for us to sell and hold the position. On the upside, we would need to see a daily close above the $90 level in order to be confident buying. In the big scheme of things, there isn’t enough demand to push oil markets higher for long. Is because of this that on a break of the $90 level, we would be willing to seriously consider taking profits at the $100 a barrel level. As for selling, we could see a sustained move if the situation in Europe or even China grinds to lower levels of economic activity.
Click here a current Crude Oil Chart.
Originally posted here
