Trading position (short-term; our opinion): No position is justified from the risk/reward perspective.

Oil bulls are pushing higher. Yet the clouds on the horizon start appearing. Will they have enough power to overcome the resistance they have just reached? If so, where next are they to encounter a stumbling block? Let's dive in right to the balance of forces...

Let's take a closer look at the chart below.

Let's start with our yesterday's words:

(...) While the daily indicators are in their overbought areas, they have not issued any sell signals just yet, and neither the green gap has been closed.

These factors point to the possibility of one more upswing in the near future. The target of such a move would be the yellow resistance zone marking the late-May highs.

Yesterday, we have seen such an upswing and the bulls have reached the yellow resistance zone. Simultaneously, the bearish divergence in the CCI keeps getting more pronounced. It points in the direction of a likely reversal shortly - especially when looking at the current and extended position of the Stochastic Oscillator.

Let's check current pricing now. Crude oil appears set for a strong opening, as it changes hands at around $59.30 currently. Therefore, an upswing continuation targeting the late-May intraday peak (or even the blue declining resistance line) can't be ruled out prior to any serious attempt to move lower.

Summing up, the bulls have reached an important resistance and despite the ongoing and increasing bearish divergence in the CCI, they appear not to be losing steam. One more upswing remains probable before any correction of recent sizable gains gets a chance to set in. As for now however, there's no opportunity worth acting upon in the oil arena.

Trading position (short-term; our opinion): No position is justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist