Crude Oil Prices August 7, 2012, Technical

By FX Empire Analyst - Christopher Lewis
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The light sweet crude markets had another bullish session on Monday as the "risk on trade" continues. The market now finds itself approaching the recent highs, and this will be where a lot of traders will simply have to make some type of decision.

The market does look rather healthy, and as such we fully expect that the recent high at the $93 level will be overcome. The $95 level will more than likely provide some type of minor reaction, as it is a large round number, but in reality should only be a minor speed bump on the way to the $100 a barrel level.

Once we get above the $100 barrel level, it is very difficult to discern what will happen next. There simply far too many headline risks out of the Middle East right now to definitively say anything beyond the next couple of days. However, it does look like there is plenty resistance above the $100 level and as such we are more than willing to take profits once we get to that area.

As for selling light sweet crude is concerned, it doesn't really seem like a possibility at this point in time. We think that the $100 level may provide an excellent opportunity to do so or perhaps some type of resistive candle between here and there. At this moment time however, there's is simply nothing on this chart that looks weak enough to sell into.

There's a real chance that this market is prone to sudden reversals, as the global demand certainly can't be there for light sweet crude as well. It's not just the problems in the Middle East that can be attributed to the potential selloff or gain of this market, but also speculation on what the Federal Reserve will do next. After all, a lot of market participants are expecting the Federal Reserve to ease monetary policy in September which of course normally weakens the US dollar, and causes demand for hard assets such as crude oil, gold, and other minerals. With this in mind however, we are skeptical and know how skittish the markets have been. Because of this we are going to be quick to take profits.

Crude Oil Prices August 7, 2012, Technical

Crude Oil Prices August 7, 2012, Technical

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