By FXEmpire.com
During the Tuesday session we saw the light sweet crude contract break above the $85 mark. This area was the beginning of what we felt was to be significant resistance. However, we also anticipated it to be a “zone” all the way up to the $86 level. During the session, we saw the oil markets slice right through those levels like they weren’t even there.
It should be noted however that the United States had a short day as traders prepare for the Independence Day holiday. Because of this, the Wednesday session will be very illiquid during North American trading, and will basically consist of electronic trading from around the world. This may make conditions in the oil markets and commodity markets on the whole very difficult for the following 24 hours.
Nonetheless, we have to look at the chart in its totality and admit that we do see bullishness continuing as this is a significant breakout. The next significant resistance will be at the $90 level, and it is there that we would look for weakness to sell. Granted, this move has been rather impressive, but we are still in a downtrend. If $90 gives way though, we have to think that $100 is the next level it’s going to be targeted.
You have to keep in mind that the Friday session features the nonfarm payroll report United States, and this will certainly have an effect on the oil markets. Interestingly enough though, a weak nonfarm payroll number could eventually push this market much higher. The reason being is that it is well known now that the Federal Reserve is paying attention to the employment number more than anything else in order to make its decisions on easing. If it goes the route of quantitative easing again, this will hurt the dollar and will certainly boost commodity prices worldwide. This will be no different in the oil markets.
With all this being said, we do favor the upside in oil for the short term. However, this week will feature several headline risks over the next couple of days. In the ECB meeting we have the possibility of a disappointment, the Bank of England also has a meeting that could move markets, and then of course the jobs number in the United States. With all this being said it will be a choppy market more than likely, but it does look like we are starting to see a bit put it back into this market. Because of this, we are bullish short-term, but would sell the first resistive candle we see between 90 and 91.
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Originally posted here
