Trading position (short-term; our opinion): profitable short position with a fresh stop-loss order at $54.51 and the exit downside target at $51.20 is justified from the risk/reward perspective.

The bulls are giving a resounding answer to our yesterday's question. Yes, they've repaired the technical damage, and moved prices higher on top. The question is whether they can sustain their gains. Let's examine together.

We'll take a closer look at the chart below (chart courtesy of www.stooq.com ).

Crude oil futures opened today with the green gap. This is a similarly bullish sign to what we saw several times in the past. It has triggered further improvement in the following hours, and at the moment of writing these words, oil futures are trading outside the consolidation between Wednesday's high and low.

Additionally, they have just climbed above the red gap, as they're trading at around $54.15 currently. Today's closing prices will be important - as long as there is no breakout above both the consolidation and the red gap, one more attempt to move lower remains likely.

Summing up, the bulls are mounting a powerful response today, and look set to close the day above both important resistances: the consolidation marked by Wednesday's opening and closing prices, and the red gap. Taking into account the vigor of the bullish move, we're tightening the trade parameters of our profitable short position remains justified.

Trading position (short-term; our opinion): Profitable short position with a fresh stop-loss order at $54.51 and the exit downside target at $51.20 is justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist