The WTI Crude Oil markets initially fell during the session on Tuesday, but as you can see found enough support to bounce and form a hammer. This hammer of course is a relatively strong looking candle, and as a result we think this market will continue to go higher, probably testing the $100 level in the short term. There is a significant amount resistance there though, and I think that it is a "zone" going all the way up to the $101 level. With that being said, just above there is a significant amount of noise, but it is a consolidation area and I believe one that the market will be attracted to.
The oil markets as usual are being driven by not only supply and demand, but the value of the US dollar as well. At the moment though, it appears that people are looking at the situation in the United States is one that could push demand down, and that of course has a great effect on the value of oil itself. Ultimately, a lot of people will use the US dollar is a proxy or a simple excuse to buy or sell oil, and that being the case as the US dollar continues to depreciate, eventually buyers will step in and start buying oil. This could be what we are starting to see at the moment.
Above $101, I see massive bullishness.
I see massive bullishness in this market we can get above the $101 level on a daily close. In fact, I think the next stop is $104, and then $108 after that. Granted, this will be a very choppy move if it does happen, but in the end the markets should reach those levels. After all, when you look at this market from a longer-term perspective, it normally goes higher all things being equal.
Pay attention to the Federal Reserve and whether or not it's going to be able to taper off of quantitative easing as well. If they do, the value the US dollar will go much higher, and that should push the price of oil down. However, it's more likely that the US dollar will continue to depreciate, which should put in a bid for oil soon.
