By FX Empire.com
The Light Sweet Crude market had a fairly weak set of sessions over the last week, although it is higher than where it started. The situation in Iran will continue to be a fluid situation that has to be watched, but at this time it appears that the situation is calming down a bit and this could be a bearish factor for oil as cooler heads prevail.
Adding to that is the weaker than expected US GDP numbers, and this could cool the demand for oil going forward. However, the markets haven’t given us the correct sell signal yet as we have been consolidating between the $98 and $104 areas lately. The area is a massive congestion spot as you can see from the trading action in August, and as a result the bulls have had a tough time getting above it.
The $105 level is going to be key for the more bullish traders to prevail. Until this area gets broken above, there is no real chance for the market to look strong as it has been so resistive lately. However, if the level gives way – the next serious resistance is at the $115 level. This will allow the markets to move in a fairly quick manner if $105 does in fact give way.
On the sell side, we see a clear shot to $95 and then $90 if $98 can give way finally. The market is in somewhat of a holding pattern as the fundamentals are swirling around between bad and worse, but the trust in paper currencies continues to decline. The markets simply look confused at the moment, and with the recent moves in the Forex markets, stock markets, and everywhere else – this isn’t a surprise.
For the longer term trader, the market may be looking a bit toppy at this point, but patience will have to be the order of the day as the level we are in at the moment is extremely choppy. The breaking below $95 finds $90 and then $80 if we can get enough momentum. In the meantime, we are flat in this market as the range has been shrinking.
Oil Forecast for the Week of January 30, 2012, Technical Analysis
Originally posted here
