By FXEmpire.com
The Light Sweet Crude markets had a strong day on Tuesday as the “risk on” attitude came back into the markets. This was lead by the better than expected ISM numbers out of America, and the announcement does suggest that the industrial base of the United States is stronger than previously thought.
The ability of the industrial sector in the United States in such economic headwinds certainly was a pleasant surprise, and as such many commodity traders were bullish in general. The fact that so much crude is used by industry in the US certainly doesn’t hurt this market either.
The shot higher follows a hammer that we had formed on Monday, always a good sign. It should be noted however, that we suggested the hammer was going to run headfirst into resistance at the $105 to $106 level, and as a result we weren’t long yet. Now that the $106 level has been broken, we are happy to buy this contract.
The Friday session will see the jobs number out of the United States, and this will certainly move this market as well. After all, if companies around America are hiring, there is a strong chance that the energy consumption will rise as well. More jobs equals more production going forward, and this will push all risk assets up, but with this market and its various other bullish headlines, this particular market could really move.
The Middle East can of course cause headlines that would push this market up as well, and the demand out of emerging markets should continue to grow. The possibility of further easing out of the Federal Reserve could also put a bid in the commodities markets as well. This should continue to force a market that looks bullish overall.
The $106 level has been broken, and now that the level has given way, we expect the $110 level to be tested again. The market likes to move from one consolidation rectangle to the next one, and that is the top of the one we just entered. Therefore, we are buying.
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Originally posted here
