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.

Although oil bulls managed to push black gold a bit higher after the market’s open, they didn’t take the commodity above this line, which resulted in a reversal. Such price action looked like a verification of the earlier breakdown under the above-mentioned line and encouraged their opponents to act.

Thanks to yesterday’s drop, the price of light crude slipped temporary below $61 and the 50-day moving average, but then rebounded slightly and closed the day above them. Despite this “improvement” the sell signals generated by the daily (and also weekly) indicators suggest 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.

Finishing today’s commentary please note that the next full alert (with charts and broader perspective) will be post on Monday.

Thank you.

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

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