Trading position (short-term; our opinion): Small (half of the regular size) short positions (with a stop-loss order at $61.13 and the initial downside target at $52) are justified from the risk/reward perspective.

Although crude increased after the market open, oil bears stopped their opponents slightly below $58 and triggered a pullback. What impact did it have on the short-term picture of light crude?

Crude Oil’s Technical Picture

Let’s take a closer look at the daily chart of crude oil (charts courtesy of http://stockcharts.com).

From today’s point of view, we see that crude oil wavered between small gains and losses yesterday, but finally finished the day several cents below the Friday’s closing price.

Did this price action change anything in the short term? Not really, because black gold is still trading below the upper border of the black rising trend channel and the upper line of the blue declining trend channel. This means that the last week’s verification of the breakdown under the upper black line and its negative impact on the price are still in effect, supporting oil bears.

The commodity also remains under the 200-week moving average, which together with other bearish signals and similarities to the past (we wrote more about them in our Friday’s Oil Trading Alert) increases the probability of further deterioration in the coming week.

Finishing today’s alert, please not that earlier today, we haven’t seen any important breakout/breakdown, which could change the overall situation. Therefore, short positions continue to be justified from the risk/reward perspective.

As always, we’ll 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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