Trading position (short-term; our opinion): short position with a stop-loss order at $58.87 and the initial downside target at $53.85 is justified from the risk/reward perspective.

Friday marked a rout of the bulls to a great extent. Today though, they're working hard to gain lost ground. With mixed results, we must add. Or does the chart hint at better days ahead for the buyers?

In short, no - but let's take a closer look at the chart below (chart courtesy of www.stooq.com ) to find out why.

We'll start with our Friday's observations:

(...) Earlier today, crude oil futures opened below the upper border of the red declining trend channel and then moved slightly lower. Since then, they've decline further...

The Stochastic Oscillator has issued its sell signal, which together suggests a drop to at least the lower border of the blue consolidation in the very near future. And indeed, black gold has almost touched the $53.40 handle earlier today.

Crude oil indeed did slide on Friday, cutting through the lower border of the blue consolidation before coming back somewhat. Earlier today, black gold has been on an upswing, though the bulls have given up part of their gains already.

This has happened after the buyers took the commodity to the upper border of the declining red trend channel. This resistance has held and oil trades at around $54.40 as we speak. Another attempt to move lower remains likely - especially when we factor in the current position of the daily indicators.

Summing up, the oil bears made themselves heard on Friday, and the bulls are having a hard time reversing the downside move. Nearest resistance has stopped the buyers, and a continuation of the move lower remains likely. The bearish positioning of the daily indicators supports such a move and the profitable short position remains justified.

Trading position (short-term; our opinion): short position with a stop-loss order at $58.87 and the initial downside target at $53.85 is justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist