Trading position (short-term, our opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.
Crude oil has been fluctuating along the $72 price level since Thursday. The market rebounded from its Tuesday’s local low of $65.01, but it keeps on struggling after reaching the resistance level of its previous local lows around $71-72. Wednesday’s Crude Oil Inventories release may have chipped in as a negative factor here – it came out bigger than expected at +2.1M barrels. The increase in Crude Oil Inventories implies weaker demand, and it’s bearish for crude prices. This morning the price of oil reached a local high of $72.42 (Crude Oil WTI).
On Thursday, July 22, we closed our profitable long position with an entry at $68.50-69.00 at the market price of $71.70 (a gain of $2.70-3.20).
Oil Remains at a Short-Term Resistance Level
The market broke below the technical support level of $70-72 recently, and then it reached $65. Afterward, we’ve seen a quick rally back, but, so far, it looks like a short-term upward correction within a downtrend. Oil is trading along its late June’s local lows of about $72, as we can see on the daily chart (the graph includes today’s intraday data):
We Are Very Close to the Resistance Levels
The market continues trading below its over month-long upward trend line after bouncing back from the support level of $65-66. The previous local lows and the abovementioned broken trend line are acting as resistance levels, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):
The weekly chart of the Light Crude Oil Continuous Contract is still showing clearly negative technical divergences between the price and the indicators:
Conclusion
On Thursday we closed our profitable long position (with an entry at $68.50-69.00) at the market price of $71.70 (a gain of $2.70-3.20). Oil has reached a potential resistance level of around $72 since then, but there have been no confirmed negative signals so far. Therefore, no positions are justified from the risk/reward point of view.
As always, we’ll keep you, our subscribers, well-informed.
Trading position (short-term, our opinion; levels for crude oil’s continuous futures contract): No positions are currently justified from the risk/reward point of view.
Thank you.
Paul Rejczak,
Oil Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care
