Trading position (short-term; our opinion): Short position with a stop-loss order at $60.22 and the initial downside target at $50.38 in crude oil is justified from the risk/reward perspective.
There is a saying – what goes up must come down. In the oil market, we have witnessed the opposite yesterday, as oil headed higher and our subscribers were prepared in advance for this very real possibility. The saying implies that forces of gravity eventually win out. The $64,000 question is which way this formidable force is positioned in the oil market right now. We invite you to take a closer look and be also prepared.
Let’s examine the chart below (chart courtesy of http://stockcharts.com).
Yesterday, we wrote that the daily indicators continue to favor another move to the downside:
(…) notwithstanding any short-term upswing that might precede it. Actually, we are seeing one right now – the price is attempting to retest the purple resistance zone.
Our expectation proved to be correct as yesterday’s price upswing was stopped dead in its tracks at the purple resistance zone. Upper knot further highlights buyers’ hesitation and the volume doesn’t support them in its implications either.
Black gold is still trading below both the purple resistance zone and the upper border of the rising purple trend channel. Additionally, we might be seeing a double top formation in the making right now.
Summing up, short positions continue to be justified from the risk/reward perspective. Invalidations of recent tiny breakout attempts continue to exert their downward influence on the black gold price as it trades below both above mentioned purple resistances. Additionally, the volume and the current position of the daily indicators favor the sellers and another move to the downside in the nearest days.
Trading position (short-term; our opinion): Short position with a stop-loss order at $60.22 and the initial downside target at $50.38 in crude oil 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
