By FXEmpire.com
The Light Sweet Crude markets have been very volatile lately, and with the Iranians working as hard as possible to avoid the reset of the world’s demands on their nuclear program, the headlines continue to plague this market. Every time something startled the markets, the price goes much higher. The $104 level has been a massive support level, and the last three weeks have produced hammers from that level.
The demand for oil has been questioned to some extent, but the lack of economic growth doesn’t seem to be dragging too much on the Chinese and Indian markets, despite US consumption problems. The oil markets could also be used to “store value” of the larger firms as the Dollar erodes at times, not to mention the other fiat currencies.
The $110 level looks resistive, and we believe that the market “wants” to test it. This market looks very, very healthy as the three weekly hammers in a row suggest that every time the market falls, there is someone stepping in to support the oil prices.
The breaking of $110 sends up much higher, possibly up to $120 or higher. A break of $120 is where traders begin to ask how much destruction that high oil prices bring to the economy, and in turn how much demand destruction comes into play. The move would undoubtedly meet the same kind of end that the previous run to the $148 level met a couple of years ago – once people start running towards the exits, everyone will. Because of this, we will place stop losses in order to lock in profits as we move forward.
None the less, these fears are far away, and in the meantime we will continue to see the market rise and without impunity. The bulls have firm control on this market, and as a result, we can only buy or be flat. Selling isn’t even possible until we break the $95 level to the downside, and this looks less and less likely as we continue to produce hammers.
Oil Forecast for the Week of March 26, 2012, Technical Analysis
Originally posted here
