By FXEmpire.com
The Light Sweet Crude markets fell on Friday as the “risk off” trade came back into vogue. The 50 day EMA is just above the current price, and it looks as if the moving average is one that the contract is following. The market is going to be a tight one, as the demand equation is one that we are going to have to come to terms with. Adding to the potential whippy behavior by the markets, there is also the possibility of headline shocks coming out of Iran and that nuclear program standoff.
A break above the 50 day EMA suggests that we will see the momentum pick back up to the upside for the bulls, and as a result we would be very interested in being long of this market. The buying of this market has been the way to go over time, and until the issues in the Middle East come to an end – and don’t hold your breath waiting – we should be more of a bullish bias. However, in the event of a global slowdown of any real strength – the Iranians won’t matter so much.
The demand for oil is still fairly strong in many emerging markets, so this is one of the other factors that have been pushing prices higher, or at least keeping them higher than one would expect.
There are talks with the Iranians over the weekend, so there is always the potential for a headline to push this market in one direction suddenly. This of course can change everything, but the most likely scenario over the weekend is very little being accomplished. True, there could be some kind of agreement, but it won’t be worth the paper it’s printed on.
The buying of this market on a daily close above the 50 day EMA is one way we will trade this market, and we suspect the move higher at that point will be a serious grind and require major patience. The recent action will continue to weigh upon the markets until the $108 level. A move above that and we are free. Selling isn’t a thought until the $95 level gets broken to the downside.
Oil Forecast April 16, 2012, Technical Analysis
Originally posted here
