The Light Sweet Crude markets rose again on Friday as the bullish sentiment continues. The Iranians have shown no real signs of backing down from the West, and as a result there is increased tension and worries for oil traders around the world.
The market has been very bullish as of late, and we are now pressing up against the recent highs in what is either going to be a double top, or a breakout. The $105 level above will almost certainly cause some kind of reaction, but the react movements suggest that there is real momentum under this market. While there is a question of demand, the truth is that you cannot deny the power of the bullish move presently.
The Iranians will continue to push the markets as higher oil prices do very little to dissuade them, and they do have customers in several countries like India and China that are willing to keep buying their oil. This is quite frankly working out for them at this point in time. Eventually there will be a breaking point, but that seems to be a long way away from here.
We are waiting to see if there is a daily close above the $105 level to buy, and are interested in seeing if the current level, $104, can hold as well. On a weak candle, we may find a way to sell on weakness in the candle, but as the massive support has been seen at the $96 level and this will more than likely suggest that we are going back into consolidation if we fall from here. The bearish case is out there, but the herd is clearly pushing prices up overall.
The breakout should have the market climbing to the next known massive resistance level at $115, and it is all the way to that level that we would be buying this market if we do get above the $105 resistance zone. Selling is possible on weakness in this area, but we are only thinking of a quick trade down to the $100 level at that point.
Oil Forecast February 20, 2012, Technical Analysis
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3