By FXEmpire.com
The Light Sweet Crude markets had a relatively bumpy ride during the previous week as it eventually went nowhere. The market has seemed to found a bottom at the $80 for the time being, and we think that this area is one of the most important for the oil market. The level will simply have to hold for the bulls to continue to have any real hope at pushing prices higher now.
The $90 level above looks as if it is going to be massive resistance as well, and as a result we think this market could be very consolidative in the short term. This market will be highly influenced by the industrial demand around the world, and the economic outlook seems to be slowing overall. The market has in general seemed to have forgotten all about the Middle East and the problems in Iran. OPEC has agreed to keep the current level of output, and as a result the supply and demand part of the equation should stay the same overall.
The candle for the week is a bit like a hammer, but truthfully if isn’t set quite right to instill confidence in a buy position. Also, the previous week formed a shooting star, so it looks like we will continue to get pulled back and forth in the near term. The uncertainty of the situation in Europe and beyond will make the “risk on” trade a flighty one from time to time, and as a result we expect expanded volatility in the short term. The longer term would be settled by a breakout of the current consolidation area.
The $80 level giving way on a daily close would be a massively bearish signal in this market. The braking of the $90 level would be massively bullish for this market as the consolidation would have given way at that point. Because of this, we are waiting for one of these areas to get broken through in order to place a longer-term trade in this market. The overall bias is down, but we need confirmation.
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Originally posted here
