By FXEmpire.com
The Light Sweet Crude markets had a rally for the Monday session as the oversold conditions brought in value hunters. The recent selloff has been brutal, and the $92 level looks as if it has held for the moment. However, the recent action has been strong enough that it is hard to think that this will end up being anything more than a bounce in the big scheme of things.
With this being said, there is still a possibility of further upside, but we aren’t interested in buying at the point as the bearish action has been far too strong. The economic situation around the globe looks weak in general, and therefore we feel that the demand for this commodity could be somewhat limited going forward.
The $98 level above looks very resistive, and we think that the area will be a bit of a “ceiling” in this market for the foreseeable future. The area would also include a lot of resistance all the way up to the $102 level, and because of this we are very leery of being long of this market in that area. Any buy positions in the meantime would have to simply be scalps, and as a result we aren’t worrying about going long at this point. In fact the candle from the Thursday session is a shooting star that shows resistance at the $94 level, and this area looks as if it could also be a place that will stifle the efforts of the bulls in this market. With that being said, it simply is much safer to skip the buy signals that could appear.
The selling of this market is what we prefer, and we will do so when we get weak or resistive candles on the daily chart. The best candle is a shooting star obviously, but the large red candles will all be possible signals as well. As the recent move has been so strong to the downside, we are looking to sell those failures on rallies, and a break of new lows as well.
Click here to read Crude Oil Technical Analysis.
Originally posted here
