Trading position (short-term; our opinion): Short positions (with the stop-loss order at $68.15 and the initial downside target at $56.57)are justified from the risk/reward perspective.

On Wednesday, crude oil declined sharply and closed the day below the lower border of the short-term blue rising trend channel. This bearish development materialized on significant volume, which together with the sell signals generated by the indicators suggests further deterioration in the coming day(s).

How low could the commodity go? In our opinion, the next downside target will be around $58.65-$59.05, where the 38.2% Fibonacci retracement (based on the August-January upward move) and the late November highs are.

Taking all the above into account, we think that opening short positions (with the stop-loss order at $68.15 and the initial downside target at $56.57) is justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

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. Nevertheless, short text messages such as the one you are reading now will also be sent tomorrow. 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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