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

On Tuesday, crude oil gained 1.36% on news that Saudi Arabia's crude oil exports dropped to 7.305 million barrels per day in Aug. Thanks to these circumstances, light crude came back above the barrier of $50, but does it change anything in the overall picture of the commodity?

Let’s examine the daily chart and find out (charts courtesy of http://stockcharts.com).

On the above charts, we see that although crude oil moved little higher and invalidated earlier breakdown under the barrier of $50 yesterday, the overall situation in the medium-, short- and even in the very short term hasn’t changed much as the commodity is still trading in the blue consolidation in the red (key) resistance zone. At this point, it is worh noting that we saw similar price action on Thursday. Back then, an invalidation of the breakdown below the barrier of $50 didn't trigger a sharp rally to fresh highs. Instead, we saw a one-day upswing, which approached the commodity to the Oct highs, but then was erased on the following day.

Additionally, sell signals generated by the CCI and Stochastic Oscillator remain in place, supporting oil bears and lower values of light crude. Nevertheless, in our opinion, as long as there won’t be a breakdown (and a daily closure) below $49.15 (the lower border of the consolidation), another bigger move to the downside is not likely to be seen and short-lived moves in both directions are very likely.

We will provide you with a bigger update once we see more interesting developments on the crude oil market. As always, we’ll 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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