Trading position (short-term; our opinion): Short positions (with a stop-loss order at $52.52 and the initial downside target at $45.80) are justified from the risk/reward perspective.
On Friday, the black gold rebounded sharply and invalidated the earlier breakdown under the lower border of the trend channel. Is this the end of declines or trap?
Crude Oil’s Technical Picture
Let’s take a closer look at the charts and find out (charts courtesy of http://stockcharts.com).
The first thing that catches the eye on the daily chart is an invalidation of the breakdown under the lower border of the purple rising trend channel. Although this is a positive development, we should keep in mind that Friday’s move materialized on smaller volume than earlier declines, which raises some doubts about oil bulls’ strength.
Additionally, crude oil futures (and also the price of the commodity) reversed and declined earlier today, which increases the probability of further declines in the very near future. Therefore, we think that short positions continue to be justified from the risk/reward perspective at the moment.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): Short (already profitable) positions (with a stop-loss order at $52.52 and the initial downside target at $45.80) are justified from the risk/reward perspective. We will keep you – our subscribers – informed should anything change.
As a reminder – “initial target price” means exactly that – an “initial” one, it’s not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we’ve done previously). Stop-loss levels, however, are naturally not “initial”, but something that, in our opinion, might be entered as an order.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts
