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

Crude oil has been moving back and forth for a few weeks now, which is in tune with what we’ve been expecting to see, but since it now moved to the rising support line (based on February and August lows, things may have changed. Was this really the case?

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

In short, the situation in crude oil is now closer to being bullish, but not there yet. The price of black gold has indeed reached the rising support line based on 2 important bottoms, but the Stochastic indicator didn’t generate a buy signal yet and Friday’s session was not a reversal. Without the confirmation from a daily candlestick and without a major improvement in case of indicators (CCI is oversold, but it needed to be more oversold to generate the real signal a few times this year) reaching the support line is not strong to generate a meaningful buy signal on its own.

If we see more bullish signs, we’ll likely open a long position, but it’s not the case yet. As always, we’ll keep you – our subscribers – updated.

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

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

We will keep you – our subscribers – informed should anything change.

As a reminder – “initial target price” means exactly that – an “initial” one, it’s not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we’ve done previously). Stop-loss levels, however, are naturally not “initial”, but something that, in our opinion, might be entered as an order.

Since it is impossible to synchronize target prices and stop-loss levels for all the ETFs and ETNs with the main market that we provide this level for (crude oil), the stop-loss level and target price for popular ETN and ETF (among other: USO, DWTI, UWTI) are provided as supplementary, and not as “final”. This means that if a stop-loss or a target level is reached for any of the “additional instruments” (DWTI for instance), but not for the “main instrument” (crude oil in this case), we will view positions in both crude oil and DWTI as still open and the stop-loss for DWTI would have to be moved lower. On the other hand, if crude oil moves to a stop-loss level but DWTI doesn’t, then we will view both positions (in crude oil and DWTI) as closed. In other words, since it’s not possible to be 100% certain that each related instrument moves to a given level when the underlying instrument does, we can’t provide levels that would be binding. The levels that we do provide are our best estimate of the levels that will correspond to the levels in the underlying assets, but it will be the underlying assets that one will need to focus on regarding the sings pointing to closing a given position or keeping it open. We might adjust the levels in the “additional instruments” without adjusting the levels in the “main instruments”, which will simply mean that we have improved our estimation of these levels, not that we changed our outlook on the markets.

Thank you.

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

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