By FXEmpire.com
The Light Sweet Crude markets fell on Wednesday as the market retested the $105 level for support. The area had been resistance, so the retest would have been expected as a classic tenet of technical analysis. The pair has broken out now, and as long as this area can hold – we should continue the move higher.
The market continues to have multiple reasons to rise over time, and as a result the overall direction in our opinion is still higher. The Middle East has slipped into the background recently, but with the tensions in Iran continuing into the summer, there is a real chance that the headlines could suddenly get very bullish again as well. Just a few choice words from Tehran or Washington could push this market higher again.
The Federal Reserve Chairman Ben Bernanke has recently suggested that the Fed still has the tools to be accommodative if the economic conditions worsen. In other words, there is a possibility of easing going further. This weakens the value of the US dollar, and as the crude oil markets are priced in Dollars, this will push the cost of buying oil higher. As long as there is a real threat of easing out of the United States, there will always be some kind of bid underneath this market.
The $105 level looks to be supportive now that we have broken out of the previous consolidation area, and the $110 level looks to be a decent target at this point. The market will more than likely continue to be choppy as the fundamentals aren’t all strong. In fact, the demand for oil has been slipping in the industrialized nations, and this will be the counter balance to the bullishness. This should pretty much ensure that the moves will not be fluid, and anyone that wishes to trade this market will have to be comfortable with a lot of back and forth movement as the headlines will continue to be disruptive. We are buying this dip as we expect the market to run to $110 before it is all said and done.
Click here a current Crude Oil Chart.
Originally posted here
