By FXEmpire.com
The Light Sweet Crude markets had a fairly quiet session on Friday again as the commodity seems content to hover just above the $80 level. The recent action has been sluggish overall, and we think that the market is either trying to form a bottom at this all-important level, or that the bears are taking a breather before pushing the market lower. It is because of this that we have to be somewhat careful at these levels, and the current action is so difficult to trade as a result.
The market has been very bearish as of late, with the move since the start of May being massively bearish. The global slowdown economically certainly won’t be helping the bullish case either. There is little to push demand forward at the moment, but this won’t stop the potential of central bank intervention.
The central banks look ready to intervene with measures of liquidity if the Greek elections turn out in an unfavorable light on Sunday, and as a result there is a chance that we get a bit of a rally due to a weakening Dollar as well as other fiat currencies. In times like that, people will buy hard assets in order to protect wealth as the currencies weaken in general.
The $90 level above looks like it is going to be the “ceiling” in this market for the short term, and it is above there that we would consider buying oil. A break below the $80 level would send this market much lower, and as a result we would be massively short of oil as we would expect quite a move at that point.
The market will be very choppy in the interim, and because of this we are flat at the moment. The oil markets are going to react to headlines that have nothing to do with oil or the use of it at all, and this is a situation where you cannot place a trade with any confidence. Once we break the $90 level to the upside – we would buy. On the other hand, a daily close below the $80 level, we are sellers.
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Originally posted here
