The Light Sweet Crude markets fell again during the session on Tuesday, and even managed to pierce the $105 level. However, if you have been watching our videos, you know that the support level is from $104 to $105, as defined by the previous resistance area. Because of this, although the move is significant, it isn't enough for us to look for selling opportunities yet.
The make or break line for us is at the $100 level, and as such we won't be short of this market until we are below that area. The market was concerned about potential Greek issues on Tuesday, so the risk off trade was in vogue. This has little to do with this market, and as long as there is tension between Iran and the West, we think there is always going to be potential for sudden shocks to the upside in this market.
The range that we look for this market to trade in is between $100 and $115 over the longer term, and as such we aren't ready to sell at all. In fact, we are looking to see if this area can produce some kind of supportive candle from which to buy. The market could very well drop a bit still, so we are willing to be patient and see what happens next. Without a doubt, there is more risk to the shocks being bullish in oil than bearish, and because of this we are remaining a bit on the bullish side going forward.
The next day or two will be vital in this market, and Friday's Non-Farm Payroll will also more than likely be a market moving event as well. This market will fall apart if the US produces poor numbers, as it would show the economy slowing down. There is also the possibility that the labor numbers turn out very strong, and this will push oil up over the course of time if history is any indicator. With all of this in mind, we are simply waiting for a hammer, bullish engulfing candle, or other such kind of bullish sign at these levels.
Oil Forecast March 7, 2012, Technical Analysis
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3