By FXEmpire.com
The Light Sweet Crude markets fell during the session on Thursday as the fears of a global slowdown have reemerged. The Chinese manufacturing numbers have been light as of late, and the market is reacting as if the recession that Europe is feeling is spreading. The reality is that the Chinese slowdown of growth from 12% to 7% was engineered, and shouldn’t have been much of a surprise.
The idea that manufactures slowing down hurting prices of oil isn’t a new one. After all, the total demand of oil by manufacturing is a significant portion of what gets consumed. The reality is that the United States is doing well, and as the US goes – so does everyone else eventually.
The candle for the session isn’t quite a hammer, but it does have some of the same characteristics. The bounce at the end of the day came from the now well-known $105 to $104 level, and the area continues to keep the market up. With this in mind, we can only assume that the level will hold. (At least until it doesn’t….) Because of this, we actually prefer to buy the contract on signs of strength.
The market looks supportive all the way down to the $95 mark, and because of this, we won’t sell even if we do get a breakdown in pricing. The Middle East continues to provide plenty of headlines for the markets to worry about, and because of this we feel that the real risk is for a shock to the upside in the energy markets.
The $108, $110, $112, and $115 levels are the next resistance areas. With the recent action in the market, it is very likely that we may see choppiness all the way up to the $122 level. This number was chosen because of a projection from the previous bullish flag. With this in mind, we are buying this contract on a break of the highs from the Thursday session, and will add after we clear the $110 resistance area in order to lever the position up.
Oil Forecast March 23, 2012, Technical Analysis
Originally posted here
