Trading position (short-term; our opinion): Short position with a stop-loss order at $60.22 and the initial downside target at $50.38 in crude oil is justified from the risk/reward perspective.
Friday’s duel ended up pretty undecided. An attempt to move higher was succeeded by a plunge, for the price to return to a practically unchanged level. Earlier today, we are seeing another attempt to move higher. Is there more to the story? Can the bulls overcome important resistances nearby? Or will they fall by the wayside?
Let’s take a closer look at the charts below (charts courtesy of http://stockcharts.com).
We wrote the following in on Friday:
(…) Take a good look at yesterday’s candle. While it is yet another close higher, it was made on an even lower volume than the day before. This tips the scales ever more subtly in the favor of the bears – just like the fact that the body of yesterday’s candle was smaller than the Wednesday’s one.
Friday brought us another unsuccessful move higher that was followed by a fast move lower, with the price ending the day practically unaffected. The resulting candle is called a doji and it underlines the bulls’ difficulties in going higher, as much as the lower volume highlights their lack of conviction in making such a move higher.
All in all, Friday marked another unsuccessful attempt to break back above the medium-term rising green line, which continues to serve as the nearest resistance.
Therefore, what we wrote on Friday in the summary, remains up-to-date also today.
Before finishing today’s Alert, let’s see the updated Elliott Wave perspective we introduced you to also on Friday.
This view hints at an upcoming top of the marked 5th wave. And one rather close in time, at that. Please also note the strong combination of resistances nearby: the medium-term rising green resistance line, the red resistance zone and the rising red resistance line. It’s a useful reminder of all the obstacles the bulls would have to overcome if they still aim to take black gold any higher.
Trading position (short-term; our opinion): Short position with a stop-loss order at $60.22 and the initial downside target at $50.38 in crude oil is justified from the risk/reward perspective.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
