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

Based on yesterday’s price action, we could write that the overall situation in crude oil hasn’t changed much as the commodity bounced off the support line and came back above the barrier of $50. Nevertheless, the Brexit vote shook the markets earlier today. Will it also change the picture of crude oil in the coming days?

Today’s alert is going to be quite short, because crude oil didn’t do anything that would change the outlook yesterday. The commodity bounced off the short-term blue support line once again and came back to the barrier of $50 – similarly to what we saw in previous days. However, the situation has changed after news from Britain, which showed that the U.K. voted to leave the European Union in a historic referendum. As a result, crude oil futures declined sharply, hitting an intraday low of $46.75. Taking this significant drop into account, we think that crude oil will follow this move and we’ll see declines after the market’s open (or even much lower open and a bearish gap). Nevertheless, even if we see such drop, we should keep in mind that around $47 is green support zone, which stopped oil bears earlier this month. Taking this fact into account, we’ll decided waiting at the sidelines for a daily/weekly closure price. We will provide you with a bigger update most likely tomorrow.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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