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Whenever I’m getting interviewed, one of the questions the interviewer always asks is, “Where is oil heading next?”

Well, months ago, I told them that oil would halt its descent around the $76-$80 area where it had former support. That happened. Then oil started to bounce quite quickly, to the amazement of many.

So recently, when the question was asked again, I told them that since oil had gone almost straight from $77 a barrel up to just over $100 with hardly any pullback, we’d likely see some sort of retreat soon.

That’s exactly what happened. Many people tried to tie this to QE or “Europe fears,” but it simply boils down to how markets trade: They advance and then have pullbacks on their way up. This is just one of those necessary pullbacks.

So while I can’t say that there will be absolutely no more pullbacks before the next advancement, I can say that now there’s more upside potential than downside risk in the price of oil. Let’s check it out below.

The Next Points to Watch on Oil: $98 and $106 a Barrel

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During the next push higher, the thing to watch is oil’s next point of resistance, which is around $98 a barrel. If it can notably close above that level, then it stands a great chance of heading to the next point of resistance at $106 a barrel.

I believe that overcoming $98 the next time around will be no great feat for oil. So I believe we’re going to make it up to the $106 level. From that point, we’ll just need to see if it can break that or not. If it can … then it’s off to prices above $110 per barrel.

Have a nice day!

Sean Hyman
Editor, Commodity Trend Alert

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