Crude Oil Price - Feb. 27, 2013

|

By: DailyForex.com

The WTI crude market tried to rally during the early hours of the session, but as you can see gave back quite a bit of the gains by the time the trading day was over with. We currently sit just above the $92.00 level, an area that has been stubbornly supportive. However, the past three candles in a row have all been shooting stars, although at the bottom of a down move. Typically, this means that there will be continuation to the downside, and I do believe that this is the case.

Looking at the chart, I believe that the $90.00 level will be targeted by the sellers. It is at this point in time that buyers should step into the marketplace and try to bid the market back up. The $90.00 level as a nice round psychologically significant number and it is a place which has seen both support and resistance in the past.

Crude Oil

Oils best friend is Ben Bernanke

Looking at the oil markets, it's hard not to come to the conclusion that it's basically a liquidity play. This is because the Federal Reserve has been printing US dollars in the form of quantitative easing hand over fist for the last couple of months, and as a result it takes more of those dollars to buy oil. Within this chart, I can see no reason to think that there is any other explanation. After all, demand simply is not there, and the industrial outlook for many of the world’s economies doesn't look all that. The European Union of course is in a recession, and the latest read of GDP out of United States was negative as well. Because of this it is hard to imagine that the demand has been pushing price higher in this market.

Going forward, I believe that the cluster between $85.00 and $90.00 should offer quite a bit of support so. Is because of this that I feel we will bounce around between $90.00 and $100.00 over the long run. It is possible that we will dip below $90.00, but as I see such consolidation just below that level, it won't be far.

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.