The Light Sweet Crude markets fell hard on Monday as the market decided to take profits from the most recent run. The candle looks very bearish, and the candle from Friday looks like a hanging man at this point. However, the trend is very positive overall, so this fall more than likely won't be a major one.

In fact, the $105 level wasn't retested after the breakout, and the level looks as if it will be supportive going forward. Of course, we need to see it happen in order to think the uptrend continues. The pullback would be a healthy one, and we suspect buying will pick up the closer we get to that level. We are buying on pullbacks and especially so if the $105 level holds. We won't sell until we manage a sub-$100 daily close.

Whether or not these things happen will more than likely be a result of headlines coming out of the Persian Gulf, and as long as the Iranians are looking to defy the West and the international community, one can expect that the oil markets will be bullish as the potential for conflict is always there.

The reality is that a war is very unlikely, but disruptions of supply could be likely if tensions don't abate. The easy policy by the Fed and many of the world's central banks will also continue to push commodity prices higher as well, and because of this we prefer going long at this point.

There will be a point in the future where oil prices will continue to weigh upon the economies of the world, and the market will have a serious correction. However, unlike the 2008 spike, there are actual reasons beyond speculation that this price of oil will continue higher. Also, there is also the possibility that the Iranian situation will cool off, and when it does - the market falls as well. Until this happens though - the path of least resistance will be higher as the fiat currencies around the world continue to weaken, and nerves continue to fray over the Middle East.

Oil

Oil Forecast February 28, 2012, Technical Analysis

Crude Oil Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
107.000
107.615
108.000
108.615
109.000
109.615
110.000

 Fibonacci
107.615
107.997
108.233
108.615
108.997
109.233
109.615

 Camarilla
108.110
108.202
108.293
108.615
108.477
108.568
108.660

 Woodie's
-
107.558
107.885
108.558
108.885
109.558
-

 DeMark's
-
-
108.808
108.519
107.808
-
-