Trading position (short-term; our opinion): Short positions in crude oil (100% size of the regular trading position) are justified from the risk to reward point of view with $11.22 as the binding profit-take level, and with $30.23 as the stop-loss level.

Today's Oil Trading Alert will once again be very short. The reason is that black gold continues to decline in tune with our previous analysis, and our short position is getting more and more profitable as a result.

At the moment of writing these words, crude oil is testing its recent lows. It might or might not succeed to break below them today, but it's likely to be successful in this endeavor shortly anyway.

Once that happens, we'll likely see another big wave lower. Crude oil below $20 was unthinkable just several months ago, and now it's reality. In this "new normal" crude oil might temporarily slide to even more unthinkable levels.

The next strong support is provided by the 2001 low of about $17, but if it fails, crude oil could slide all the way down to the $11 level. Ridiculous? Yes, but impossible? Absolutely not. Likely? Yes, but not very likely. We might see the final bottom at $17, but it's too early to say that it will indeed be the case. Unless we see some meaningful bullish indication while crude oil is trading close to $17, we'll likely keep our original target for this decline intact.

Summing up, it indeed seems that we'll see lower crude oil values in the following days.

Trading position (short-term; our opinion): Short positions in crude oil (100% size of the regular trading position) are justified from the risk to reward point of view with $11.22 as the binding profit-take level, and with $30.23 as the stop-loss level.

Thank you.

Nadia Simmons
Day Trading and Oil Trading Strategist

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager