Trading position (short-term; our opinion): No position is justified from the risk/reward perspective.
In yesterday's Oil Trading Alert, we analyzed various technical factors and assumed that the support of the buy signals generated by daily indicators may encourage the bulls to continue climbing to higher levels.
Black gold gained 0.46% yesterday, finishing above the Fibonacci retracement discussed yesterday. As yesterday s session didn't bring any technically significant changes, our earlier comments remain up-to-date. Therefore, we encourage you to read them below.
Let's look at the chart below (charts courtesy of http://stockcharts.com and www.stooq.com ).
(...) taking into account the lack of sell signals, it seems that we'll see another attempt to break above the 38.2% Fibonacci retracement next.
If the bulls win the battle around this level, the way to the orange gap and the late-September peaks could be open. But the sellers can take advantage of any sign of their weakness quickly.
Does the current market situation somehow affect our current position? At the moment, the answer is no. Why? Because the potential for the growth seems to be limited not only by the Fibonacci retracement, but also by the aforementioned gap. Therefore, we will wait for the result of the battle for 38.2% Fibonacci retracement before deciding to open any positions.
Summing up, the EIA data surprised market participants, encouraging the bulls to take over the market. As a result, crude oil futures rallied above the nearest resistances and then hit resistance created by the 38.3% Fibonacci retracement. In our opinion, the result of the battle for this level will show if buyers are ready to attack the price gap created in September (and marked with orange on the daily chart), which blocks the road to the north since September 25, 2019.
Trading position (short-term; our opinion): No position is justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
