Trading position (short-term; our opinion): Short positions (with a stop-loss order at $48.56 and initial downside target at $35.24) are justified from the risk/reward perspective.

Although crude oil hit another fresh high supported by reduction in U.S. production and weakening U.S. dollar, the commodity reversed and gave up some gains after news that OPEC's oil output approached the highest level in recent history in Apr. As a result, light crude came back under the long-term declining resistance line. Will it encourage oil bears to act in the coming week?

Today’s alert is going to be quite short, because crude oil didn’t do anything that would change the outlook on Friday and the same applies to today’s session so far. Although the commodity increased slightly above the long-term declining resistance line on Friday, this improvement was very temporary and light crude pulled back, closing the week under this important resistance and invalidating earlier small breakout (a negative signal). Additionally, the first Fibonacci retracement level based on the entire Apr 2011-Feb 2016 downward move continues to keep gains in check, which means that the comments that we made on Friday remain up-to-date also today and if you haven’t had the chance to read our previous Oil Trading Alert, we encourage you to do so today.

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

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