By Russell Glaser – While the dollar may be the largest casualty from the Fed’s commitment to purchase 600 billion dollars worth of US government bonds, the biggest winner may be crude oil.
Following the Fed’s announcement that essentially loosens US monetary policy, crude oil is testing its highest price since May.
A weak dollar is one reason for the rise in the price of crude oil. As the greenback weakens, crude oil becomes less expensive for those who hold foreign currencies. Another reason for the price increase in crude oil is the expected recovery in the US economy.
Looking at the weekly chart of crude oil, we can see that a key resistance level rests between $86 and $87 dollars. This resistance level stems from instances in December of last year and May of the current year.
We will be looking for a close above the $87 level to induce further buying of crude oil.
Two resistance levels traders should keep in mind are the $90.50 mark, along with the psychologically important $100 a barrel price.
This week’s supports rest at the mid October low of $79.80 and the long term rising trend line at $76.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
