By FXEmpire.com
The Light Sweet Crude markets fell hard on Thursday as the support finally gave up. The market has been in a strong consolidative move over the last couple of weeks, and we were starting to wonder if it was ever going to continue the downtrend that had been so strong in this market previously. Luckily, we finally got that answer during a very clear session on Thursday.
The breaking of the $80 level can be predicated upon several different reasons, as the rising US dollar continues to work against the value of “stuff” such as crude oil and other commodities. (Gold had a horrific day on Thursday as well.) The breakdown of the oil markets seemed to be a long time coming, as the Dollar has been so strong lately. Another concern is the slowdown around the world. After all, if there is less manufacturing, there will certainly be less oil used in the process of making, shipping, and selling goods. Adding to this, the situation with the Iranians has cooled down considerably, and this takes some of the “Middle Eastern Fear” out of this bid as well.
The breaking of the $80 level should be the start of the next major leg down. Without a doubt, we see support at $75 and $70, and those areas should produce some kind of bounce. However, unless something changes drastically, this market could go much lower. There are some analysts out there that are simply saying “pick a number” as far as trying to figure out a target, and because of this we are willing to try and hold onto any sell positions we can, using a trailing stop.
The buying of the market is almost an impossibility at this point, and unless we see either quantitative easing or an uptick in the industrial demand around the world, we just don’t see a case for the bulls at this point. Yes, there will be up days, but overall we think the oil markets have spoken very clearly and are going to go lower at this point in time.
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Originally posted here
