By FXEmpire.com
The Light Sweet Crude market fell again on Wednesday as the “risk off” trade came back into the markets. Continued fears over the European situation weighed on the markets in general, and the oil markets weren’t any different. With this in mind, the trend of falling continued throughout the session.
The market has smashed through our support level of $95, and it now seems as selling is going to be the way to go for the near term. The breaking of that level was a bit of a watershed moment for us, and we now will only sell this market as buying is proving fruitless. The fall has been quite extraordinary, and as long as there are problems in the European Union, there is going to be a flight into the US dollar. As the value of the US dollar increases, it takes less of them to buy things like oil, copper, or other commodities.
The value of the Euro will continue to dictate how the market on the whole reacts, and this will be true in this market as well. The Euro is being sold off relentlessly, and the reaction to the various problems in Europe is somewhat predictable as money flows out of that area and into such things as the US stock markets, or even more likely US Treasuries. This will continue to drive demand for the Dollar, and this should continue the bearish tone of commodities on the whole.
Now that the $95 level has been broken, we think that the next major target will be the $90 level. The oil markets and the Light Sweet Crude market especially, tend to follow technical levels in a very precise manner. Because of this, we think that the next “large round number” makes sense as a target. Quite frankly, we could fall much lower than that. We are certainly at a point that the oil market could really fall apart if there isn’t some kind of support and soon. The fall has been that dramatic.
We are selling rallies as they come on the shorter time frames. Buying isn’t going to be possible until we break and close above the $98 level again.
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Originally posted here
