Crude Oil Prices December 20, 2012, Technical Analysis

Light Sweet Crude

The light sweet crude markets had a strong session on Wednesday as the market raced to press up against the $90.00 level. This is an area that we expected to see resistance come into the marketplace, and as a result we are currently waiting to see and exhaustion candle in order to start shorting again.

Looking at this chart, we can see quite a bit of resistance all the way to the $94.00 level, and because of this we are very hesitant to buy at this point time. There was a greater than expected draw down in inventories reported in America, and this of course was very bullish for oil in general, but in reality, the markets are a little thinner than usual, as well as the fact that we do have this major resistance above. Because of this, again, we are going to be looking for that exhaustion candle to start selling again.

Brent

The Brent markets rose as well during the session, and even managed to break above the $110.00 level. This area is a minor resistance area however, as we see the $112.00 level being much more resistive. In fact, much like the light sweet crude markets, we are more than willing to sell resistive candles that we see in the general vicinity just above.

It isn’t until we get above the $112.00 level that we feel comfortable buying this market. We would need to see a daily close above that level, as it would show a serious breaking of the resistance above. We do think that there is enough momentum in this market to test that area, but we still are skeptical as to whether or not it will actually break once tested.

Going forward, we still think that the markets will eventually show themselves as being very sideways between now and the end of the year. This will be especially true as we get later in the week as traders will be leaving for the holidays. This time of year can be very thin trading in this market, and as such any trades that are taken must be accompanied by a stop loss.