By FX Empire.com
The Light Sweet Crude market fell for most of the session on Wednesday as the market continued to cool off a bit. However, in the later part of the session we saw the gap reached that was formed about a week and a half ago. As expected, this area would prove to be supportive, and the bounce at the end of the day formed a nice hammer.
The hammer shows that perhaps we are ready to take on the $110 resistance area again, and that maybe some of the traders that missed the move last time finally got involved to capitalize on the uptrend. The recent action suggests that we are heading towards $115 before it is all said and done, and this recent pullback should only be a buying opportunity at this point.
The $105 level was previous resistance, and now that it looks supportive, this will be classic technical analysis. The axiom “what was once resistance is now support” seems to be coming true, and on top of this: the fundamentals suggest that we will see higher prices as well.
The ongoing issues with the Iranians will certainly have an effect on this market, and headline risks still abound in this market. At any given moment there could be some kind of announcement that will send this market higher. Because of the weight of the possible negative headlines, we feel that any shocks will more than likely be to the upside rather than downside. With this in mind, we only buy this market, and think that we will see much higher prices in the future.
The breaking of the highs of the Wednesday session will send this market higher, and we will buy and hold for a $110 print. The breaking above that level on a daily close opens the way to reach $115, which we have as our longer-term target based upon the original breakout above the $105 level. With all of this being said – a break above the top of Wednesday’s highs has us buying again as the trend will look set to continue.
Oil Forecast March 1, 2012, Technical Analysis
Originally posted here
