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.
Little has changed recently in the crude oil market. Restrictions of Fed's measurements, COVID-19 waves of infections, USD fluctuations, demand worries, and, most recently, Trump's health status and the U.S Election season all still heavily influence each marketplace, with another month of volatility looming upon us.
Entering October, the crude oil price is unlikely to rise higher from the current figure soon. Considering the most recent USDX breakout and its invalidation, it was understandable that the currency market's pressure against crude oil prices will continue. In a nutshell, the situation remains the same as yesterday, as crude oil continues to edge lower, and the USDX continues to make 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. It is quite a bearish combination of events, as previously, crude oil only mirrored the USDX's performance. The USDX rally triggered a decline in the black gold price, as we had been expecting it to.
Afterward, crude oil took a breather, just as the USDX did.
However, now, we can see that crude oil is declining even without USD Index's help, which is an extremely bearish dynamic for the former.
As we've predicted previously in our analyses, 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 sum things up, 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
