The oil markets fell for the previous week, but managed a bounce from the crucial $104 level in order to form a hammer for the week. The candlestick being formed for a second week in a row is certainly a bullish sign, and it should be said that the daily chart is forming a bullish flag as well. With all of these things lining up, it seems that oil markets are about to rise again.
The headline risks are certainly still out there, and as such this market will continue to have at least somewhat of a bid for the foreseeable future. The Iranians continue to be in focus, and as long as this is the case, the oil markets will be susceptible to sudden spikes. It should be noted that the biggest part of the loss for the week was in reaction to a Reuters report that suggested the United States and the United Kingdom are getting ready to release their Strategic Petroleum Reserves, and this of course caught the market off guard. The report was quickly denied by the White House, and as a result the losses were very quickly reversed. In other words, it was an artificial low, and as we know from the most recent SPR release, these moves will only knock down price for a few days.
The breaking of the top of the weekly candle sees us looking at being long of this market for the $110, $115, and $122 levels. The first two levels are obvious resistance points to us, and the third one is actually based upon the daily bullish flag that has been forming. The downside looks very well protected by a massive cluster all the way down to the $95 handle, and as such we simply cannot be bothered to even think about doing that. We are willing to go long at levels just above where we are now, and think that the $122 handle is still very doable at this point. The markets can be added to as well every time we clear one of these levels to maximize profits.
Oil Forecast for the Week of March 19, 2012, Technical Analysis
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3