Oil bulls are a battle-hardened species. Not only have they rebuffed the bears' attack to close higher yesterday, they've been building upon their gains earlier today too. Right now, they're in the vicinity of an important resistance level. Will they manage to break above it? We're not too far from opening a new trading position...
Let's take a closer look at the charts below (charts courtesy of http://stockcharts.com and www.stooq.com ).
Yesterday's session opened with the bears taking oil lower only to see the bulls take initiative and close the day above the previously-broken lower border of the blue consolidation.
The buy signals continue to support the buyers but there's a fly in the ointment - the decreasing volume of the upswing. Let's take a look at the action in the futures for more clues.
Earlier today, the oil futures opened with a bearish gap, but the bulls haven't given up - they have managed to close that gap before long. At the moment of writing these words, black gold is trading at around $56.50.
Crude oil futures have invalidated their earlier breakdown below the consolidation that took shape after the waterfall slide of Aug 1st. Coupled with the buy signals of the daily indicators, this suggests further price improvement. Such a bullish outcome would be more likely and reliable though only if the futures break above the 38.2% Fibonacci retracement first.
Should we see that, the next upside target would be the red gap. But this gap has stopped the bulls earlier this month - as long as it remains open, another move to the downside can't be ruled out.
Summing up, black gold has invalidated its breakdown below the recent consolidation, and the daily indicators suggest further improvement. The only cautionary sign is the comparatively lower volume of yesterday's session. Should we see oil bulls appear in strength and overcome predefined hurdles we've shared with our subscribers, we'll consider opening long positions.
If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Oil Trading Alerts in order to also benefit from the trading action we describe. For instance today, we've shared with our subscribers the specifics of what would make us open a long position. We encourage you to sign up for our daily newsletter, too - it's free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. On top, you'll also get 7 days of instant email notifications the moment a new Signal is posted, bringing our Day Trading Signals at your fingertips. Sign up for the free newsletter today!
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Sunshine Profits - Tools for Effective Gold & Silver Investments
