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.
Yesterday, crude oil moved lower once again, even though the USD index hasn’t rallied, and the general stock market was going up. The situation remains unchanged today as well, and the fact that crude declined further instead of rising tells us precisely the direction in which the marketplace moves.
For a better context, let’s look at yesterday’s chart below.
Our predictions from the past several weeks turned out to be entirely accurate. Crude oil couldn’t move above the 61.8% Fibonacci retracement and the upper border of the vast March price gap.
Hence, the medium-term rally that started back in April has most likely ended, and that the next big move will be a declining one. The bearish link between the USD Index and crude oil confirms it.
In the past few months, the black gold’s price hasn’t been doing much. But, once it 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 future 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
