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

On Thursday, crude oil moved higher once again, but the nearest resistances continue to keep gains in check. Will oil bulls be strong enough to break above them?

Crude Oil’s Technical Picture

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

Looking at the daily chart, we see that although crude oil moved lower after the market’s open, oil bulls stopped further deterioration, triggering a rebound. As a result, the black gold moved higher and approached Wednesday’s high and the 50-day moving average.

What’s next for Light Crude?

As you see, this resistance together with the 50% Fibonacci retracement, successfully stopped oil bulls at the beginning of the month, which suggests that we may see a similar price action in the coming days. Additionally, the size of volume during recent increases were smaller from day to day, which doesn’t confirm oil bulls’ strength and suggests that they may be out of power in the near future. Nevertheless, taking into account the buy signal generated by the daily indicators, we think that the commodity could test the July high before the next move to the downside.

Therefore, if we see more bearish factors on the horizon (for example another increase on smaller volume), we’ll consider opening short positions. As always, we’ll 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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