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

On Tuesday, black gold extended losses and closed the day under the first very short-term support area created by the January 31 and Monday lows (around $63.50). This negative event together with the sell signals generated by the all daily indicators suggests further deterioration in the coming day(s).

How low could the commodity go? In our opinion, the next downside target is quite close to current levels – around $62.78-$63.05, where the January 19 and 20 lows are. Additionally, slightly below this zone is also the lower border of the blue rising trend channel (currently at $62.15), which serves as the nearest important short-term support at the moment of writing these words.

Taking all the above into account, we think that the space for declines is too small to justify opening short positions - especially ahead of the EIA weekly report. Nevertheless, if we see a breakdown under the lower line of the trend channel, we’ll consider opening short positions. We’ll keep you - our subscribers - informed should anything change.

Finishing today’s commentary please note that there will be no regular Oil Trading Alerts until the end of the week. The next full alert (with charts and broader perspective) will be post on Monday. Thank you for understanding.

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

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