Trading position (short-term; our opinion): Short position with a stop-loss order at $57.86 and the initial downside target at $53.28 is justified from the risk/reward perspective.
Let's take a closer look at the chart below (chart courtesy of www.stooq.com ) and assess the likely crude oil price path ahead.
The short-term situation hasn't changed much. Crude oil futures keep trading inside the blue consolidation and around the red support/resistance line and the 50% Fibonacci retracement.
They're also still trading inside the purple rising trend channel below the upper border of the orange gap. Therefore as long as there is no breakout above these resistances another attempt to move lower is likely.
Summing up, after yesterday's downswing, crude oil are moving higher today. The short-term picture is unchanged though, as prices are trapped in the blue consolidation and around the horizontal red support/resistance, the 50% Fibonacci retracement and the orange resistance. Unless we see a breakout above these resistances, a reversal lower is likely, and the short position remains justified.
Trading position (short-term; our opinion): Short position with a stop-loss order at $57.86 and the initial downside target at $53.28 is justified from the risk/reward perspective.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist