Trading position (short-term; our opinion): Short position with a stop-loss order at $59.60 and the initial downside target at $53.28 is justified from the risk/reward perspective.

While crude oil futures moved higher yesterday, the bulls had no success closing any of the open three gaps - neither the pink, nor the orange, nor the red one. This relative weakness triggered a pullback and the futures finished the day below the orange gap.

Earlier today, the futures opened with yet another bearish gap, which by itself doesn't bode well for the bulls. This is especially so when we factor in the nearest key resistance area created by the above-mentioned three gaps and the 61.8% Fibonacci retracement.

As long as the gaps keep putting a stop to the bulls' effort, the way higher is blocked and reversal remains just around the corner. Should we see prices decline from here, the lower border of the blue consolidation and the lower border of the rising green trend channel will likely be tested in the coming days.

Summing up, despite yesterday's upswing, the bulls are facing difficulty overcoming the new set of resistances: the 61.8% Fibonacci retracement, and the three gaps (pink, red and orange ones). There's also the upper border of the rising green trend channel and the Sept 18-23 peaks in the proximity. This formidable combination of resistances could trigger a reversal shortly, and the short position is justified.

Trading position (short-term; our opinion): Short position with a stop-loss order at $59.60 and the initial downside target at $53.28 is justified from the risk/reward perspective.

Please note that due to the upcoming U.S. holidays, there won't be any Alert tomorrow or the day after. The Service will resume on Monday. Happy Thanksgiving!

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist