Trading position (short-term; our opinion): No position is justified from the risk/reward perspective.

While it's true that crude oil futures have again risen today, the overall situation hasn't changed much. Black gold keeps trading inside the purple consolidation and below the key resistance zone.

Let's bring up our lengthy yesterday's commentary:

(...) Crude oil futures extended gains on Friday, and the bulls succeeded in breaking out of the blue consolidation and closing the day above its upper border.

While this is a bullish development, the buyers were stopped by the lower border of the red resistance zone. This zone is marked by the upper border of the rising green trend channel, and the 76.4% and 78.6% Fibonacci retracements.

A pullback followed, and earlier today, the futures opened with the red gap, which increases the probability of a reversal. Even if the bulls manage to close it in the following hours, we continue to think that the above-mentioned resistance zone will be strong enough to stop the buyers in the following days. This is especially the case when we factor in the extended position of the daily indicators.

Should it be the case and there are reliable signs confirming the bulls' weakness (such as an invalidation of the breakout above the upper border of the blue consolidation and a daily close inside the formation), we'll consider opening short positions.

Summing up, neither on Friday nor yesterday did the buyers manage to overcome the lower border of the red resistance zone. This zone (marked by the upper border of the rising green trend channel, and the 76.4% and 78.6% Fibonacci retracements) just keeps stopping the bulls. The extended daily indicators support such an outcome today too. Should we see reliable signs of the bulls' weakness, we'll consider opening short positions.

Trading position (short-term; our opinion): No position is justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist