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Crude Oil Prices December 13, 2012, Technical Analysis

By:
Christopher Lewis
Updated: Aug 21, 2015, 00:00 UTC

Light Sweet Crude The light sweet crude market had a very strong showing on Wednesday as the support level continues to hold prices up. In fact, we closed

Crude Oil Prices December 13, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude market had a very strong showing on Wednesday as the support level continues to hold prices up. In fact, we closed the very top of the candle which of course suggests that we could have continued follow through. However, the demand for oil simply is not there as we had a stronger than anticipated build in inventories in not only light sweet crude, but gasoline as well in the United States.

However, later in the session the Federal Reserve announced that it would continue to expand its asset purchase program, effectively printing US dollars. This of course works on the value of the Dollar, and as a result commodities rise. That’s essentially what this bounce is about, and we still feel that rallies like this are to be so will this as we see a week candle. 

Crude Oil Prices December 13, 2012, Technical Analysis
Crude Oil Prices December 13, 2012, Technical Analysis

Brent

The Brent market had a slightly stronger showing for the day, bouncing off of the $106.00 level and breaking above the top of the shooting star from Tuesday. This shows an enormous amount of strength as a shooting star simply a very resistant candle. However, we think that the soft the bias is probably stuck in for a while, and also that most of the bounce would’ve come from the Federal Reserve lengthening its asset purchase program during the session.

This is not a case of Brent strength, but rather one of US dollar weakness. Most of the time these types of knee-jerk reactions get corrected, and unless something changes drastically, we feel that breaking above the $112.00 level is very unlikely for this market.

In fact, we feel that the $110.00 level is the start of massive resistance all the way up to $112.00 or so. That entire zone should be a nice area to look for sell signals, and as a result we are not buying this strong candle that formed for the session on Wednesday, rather we are looking for weakness ahead to start shorting again. We believe in the long run that oil will test much lower prices, and as such are going to follow the longer-term trend as you can see we have been making lower highs since late summer.

 

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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