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

On Friday, crude oil declined under support levels as uncertainty around OPEC cut deal continued to weigh on investors’ sentiment. What’s next for the commodity?

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

The first thing that catches the eye on the daily chart is a breakdown under the green support line based on the previous lows. With Friday’s decline, the commodity also slipped below the 50-day moving average and Fibonacci levels, which doesn’t bode well for light crude – especially when we factor in a sell signal generated by the Stochastic Oscillator. Taking all the above-mentioned negative factors, it seems that crude oil could extend losses and even a test the previously-broken 200-day moving average in the coming days. Therefore, in our opinion, closing long positions and taking profits off the table is justified from the risk/reward perspective.

Summing up, crude oil declined under important support levels, which in combination with a sell signal generated by the Stochastic Oscillator suggests that we may see another attempt to move lower and even a test the 200-day moving average in the coming days.

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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