Trading position (short-term; our opinion): Long positions (with the stop-loss order at $65.10 and the next upside target at $73.47) are justified from the risk/reward perspective.
Despite the last week's fall below one of the moving averages, oil bulls do not give up and attack the barrier of $70. Will yesterday's additional positive signals be enough to effectively break through to higher levels in the coming days?
Let’s examine the charts below (charts courtesy of http://stockcharts.com).
Technical Picture of Crude Oil
Looking at the weekly chart, we see that crude oil moved from one consolidation into another (we marked them both in blue), which means that the overall situation in medium term remains unchanged.
What can we infer something more from the daily chart?
Well, not much more than from the weekly chart discussed above, because light crude is still trading in a narrow range between the support zone (created by the medium-term blue support line - the lower border of the rising trend channel marked on the weekly chart and the green dashed support line, which could be the lower border of the very short-term rising trend channel) and the red resistance area based on the 61.8% Fibonacci retracement and the previous highs.
Nevertheless, yesterday’s upswing materialized on bigger volume than Monday’s drop and the Stochastic Oscillator re-generated the buy signal, suggesting that another attempt to move higher may be just around the corner.
Taking all the above into account, we believe that the comments that we made in our Oil Trading Alert posted a week ago about next upside targets remain up-to-date also today. Therefore, if you haven’t had the chance to read that alert, we encourage you to do so today:
Crude Oil – Why $74?
Trading position (short-term; our opinion): Long positions (with the stop-loss order at $65.10 and the next upside target at $73.47) are justified from the risk/reward perspective.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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