By FXEmpire.com
The Light Sweet Crude market bounced again on the Tuesday session as rumors of more stimulus hit the markets. The fact is that each round of stimulus simply is getting less and less effective, and as a result this bounce is probably going to be short lived at best.
The situation in the Middle East has taken a backseat to the problems in Europe, and as a result most traders simply don’t care much about the Iranian situation at the moment. In fact, it looks as if the market is focusing solely on the European questions at the moment. The idea of any real relief in Europe has been sending the risk assets higher lately, and the oil markets haven’t been any different.
The $80 level continues to be massive support in this market, and as a result we aren’t overly surprised by the bounce as the market got so close to it. However, the recent action has been anything but impressive for the bullish argument, so a fall below that level is expected. The market is suffering as the Dollar continues to gain, and with the problems in Europe, it is likely to continue to do so.
The breaking of the $90 level on a daily close would be needed for us to get bullish of oil, and we would think that there would have to be an uptick of demand in order for this to happen. If the stimulus does in fact happen, we could get a nice pop, but this would more than likely end up being only a selling opportunity as it would certainly be viewed as an confirmation of the weakness of global markets.
Because of this, until we get over the $90 level we are only selling this market. Essentially, we are fading rallies on weak candles, and most certainly selling on a daily close below the $80 level. If the $80 level gives way, there is a real shot at the market seeing a move down to the $70 level before it is all said and done.
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Originally posted here
