Trading position (short-term; our opinion; levels for crude oil's continuous futures contract): Full (100% of the regular position size) speculative short positions in crude oil are justified from the risk to reward point of view stop loss $45.63 at and $30.22 as the initial target price.
We've just entered a new trading week, but things have barely moved in the crude oil market, given the tumultuous effects of demand worries, the recent surge of COVID-19 infections, Trump being coronavirus positive, USD fluctuations, and the U.S Election season in its full swing now. To put it differently - we're entering into one hell of a month for the marketplace!
In the near future, it seems very likely that the crude oil price won't rise higher from the current figure. With the most recent USDX breakout and its invalidation, it was understandable that the currency market will continue to put pressure on oil price. Now, crude oil continues to edge lower, and the USDX continues to rally with positive impulses.
If you've just signed up for our premium Oil Trading Alerts, for a better context, please read our analyses from September 18th and September 21st for more details.
The USDX moved a bit lower, while crude oil declined. Quite a bearish combination of events, as previously, crude oil only mirrored the USDX's performance. In alignment with our expectations so far, the USDX rally triggered a decline in the black gold price.
Afterward, crude oil took a breather, just as the USDX did.
However, now, we can see that crude oil continues to decline even without USD Index's help, which is an extremely bearish progression.
As we've predicted in the previous weeks, crude oil could not move above the 61.8% Fibonacci retracement and the upper border of the huge March price gap.
This means that the medium-term rally that started back in April has most likely ended and that the next big move will be to the downside. The bearish link between the USD Index and crude oil confirms it.
Once crude oil breaks below the September lows (which could happen shortly), the decline would likely accelerate.
To summarize, for the upcoming weeks, the outlook for crude oil stays bearish, and the most recent upswing did not change that at all.
As always, we'll keep you, our subscribers well informed.
Trading position (short-term; our opinion; levels for crude oil's continuous futures contract): Full (100% of the regular position size) speculative short positions in crude oil are justified from the risk to reward point of view stop loss $45.63 at and $30.22 as the initial target price.
In the futures contracts that are more distant than the current contract, we think adding the premium (the difference between the July and other contracts) to both: stop-loss and initial target prices is justified.
Thank you.
Nadia Simmons
Day Trading and Oil Trading Strategist
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
