Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
Although crude oil moved higher after the Monday’s markets open, the first resistance stopped oil bulls, triggering a pullback. What does it mean for the commodity?
Let’s check the very short-term chart and find out (charts courtesy of http://stockcharts.com).
Looking at the daily chart, we see that although crude oil moved higher after the market’s open, the 50-day moving average easily stopped oil bulls triggering a pullback. As a result, light crude came back to both black support lines, which makes the very short-term picture unclear. On one hand, the commodity remains above these lines, the green support zone and the Sep lows, but on the other hand, the first (and let's be honest quite weak) resistance was strong enough to stop increase.
What’s next? The current position of the indicators (the CCI generated a buy signal, while the Stochastic Oscillator is very close to doing the same) suggests that the space for declines is limited and reversal is just around the corner.
Nevertheless, in our opinion, another move to the upside will be more likely if light crude closes today’s or one of the following sessions not only above the upper border of the black declining trend channel, but also above the rising support line based on February and August lows. If we see more bullish signs, we’ll likely open a long position, but it’s not the case yet. As always, we’ll keep you – our subscribers – updated.
Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed with bullish bias
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you – our subscribers – informed should anything change.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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