The light sweet crude oil market rallied on Monday, as we get word Iran is planning on closing the Straight of Hormuz.
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Light Sweet Crude Oil
The light sweet crude oil market jumped significantly during the trading session on Monday to pierce the 50-day EMA, but it did give back some of the gains. The biggest driver of course would be the fact that the Iranians have said that they will close the Strait of Hormuz and cut off the supply of crude oil to the rest of the world.
That being said though, the thing that you need to truly pay attention to is the fact that we are near the bottom of the range when we jumped so I think the market was just trying to find some type of reason to rally.
Technical Outlook and Geopolitical Risk
If we can continue to go to the upside, the $100 level could be a target. After that, you'd be talking about $105 followed by $110.
I do believe this is a market that continues to have plenty of support because we have so much in the way of problems in the Middle East and of course uncertainty when it comes to whether or not the hostilities between the United States and Iran can finally cease.
With this being said, I think you have a situation where traders continue to look at this as a market that is basically headline driven and as a result it will continue to give you problems as far as sudden headlines that make this a market that remains very difficult.
Big position sizing would be a great way to lose money, so I would be very cautious with that and I recognize that at this point it makes more sense to see the market continue to find reasons to rally, but could get sold off just as quickly and therefore you need to make sure that you have stop losses in place and you also have position sizing understand that this is a market that is probably not for those who are beginner traders.
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