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

Yesterday, the black gold moved sharply higher as the combination of an OPEC deal and another drop in U.S. crude oil inventories supported the price. Thanks to these circumstances, light crude approached the barrier of $50. What’s next?

Let’s take a look at the daily chart to find out (charts courtesy of http://stockcharts.com).

Looking at the very short term chart, we see that crude oil bounced off Tuesday’s low and increased sharply yesterday, reaching the previously-broken black rising line based on the Aug and Sep lows. Although this resistance triggered a small pullback before the session’s close, oil bulls pushed the commodity higher earlier today (which is not seen on the daily chart yet).

How high could the black gold go in the coming days? Taking into account the fact that the size of volume that accompanied yesterday’s increase was huge and a buy signal generated by the Stochastic Oscillator, it seems that the commodity may test the Jun and Oct highs in the coming days. Nevertheless, as long as light crude remains in the red resistance zone, waiting at the sidelines is justified from the risk/reward perspective. In other words, we’ll let you know when the risk to reward ratio appears favorable for the next trade (a one likely to increase the profits that we made on the previous ones).

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you – our subscribers – informed should anything change.

Thank you.

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

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