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

On Monday, crude oil bounded off the lower border of the rising trend channel, which resulted in a comeback to the resistance line, which stopped oil bulls several times in the previous week. What's next: verification of the breakdown or further improvement?

Technical Analysis of Crude Oil

Let's examine the charts below (charts courtesy of http://stockcharts.com).

Looking at the daily chart, we see that the lower border of the green rising trend channel encouraged oil bulls to act during yesterday’s session, which resulted in a quite sharp rebound.

Thanks to this price action light crude came back to the previously-broken red declining dashed line based on the January and February peaks, which looks like another verification of the earlier breakdown – especially when we factor in two facts: first, that yesterday’s move materialized on smaller volume than earlier declines and second – the sell signals generated by the indicators remain in place.

Nevertheless, taking into account two triangles marked on the weekly chart below and based on them triangle apex reversal patterns (we wrote more about them in our Oil Trading Alert posted on March 16, 2018), we decided to close short positions and take profits off the table as the probability of further improvement is very likely.

Summing up, crude oil bounced off the lower line of the green rising trend channel, which together with two triangle apex reversal patterns suggests that we’ll see further improvement in the coming day(s).

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