By FXEmpire.com
Light Sweet Crude markets got hit hard again on Tuesday as the “risk off” trade accelerated. The leftists in Greece have come right out and stated that they consider the austerity measures as “null and void”, and this sent all risk assets down for the session.
On top of this, we have had several comments by the Saudis lately suggesting that the market was too high. (However, it must be said that they suggest that $100 is optimal, and that was passed a few days back.) The OPEC countries find themselves in a particularly interesting position now, as the various regimes that haven’t been having domestic problems can relate that fact directly to subsidies to citizens. If oil isn’t producing the normal income that the nations need in order to continue the programs, unrest could happen in short order. In fact, this is without a doubt the biggest concern as far as oil prices are concerned in Riyadh.
The action for the last two sessions will have been somewhat encouraging to the bulls, as the $95 level has now produced two daily hammers in a row. This is a very bullish sign, and if we bounce from here – there is a real chance this will be the intermediate bottom in this market. With this being the likely case, we are more than willing to buy on a break of the highs form both Monday and Tuesday.
The 50 day moving average is above the current price levels, so there is a chance that any pop will be a short-term ordeal, so we are looking to get out of the trade at about $102 as it shows significant resistance. At this point in time, it is likely that the sellers will step back in.
However, if we break the lows of Monday and Tuesday, this would be very bearish to us at this point and have us doing something we haven’t thought of in a long time: Sell oil. The $95 level is the absolute bottom for us, and we will treat it as such at this point. On a break higher than the highs so far this week, we buy. On a break lower, we sell. It’s that simple now.
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Originally posted here
