Trading position (short-term; our opinion): Short positions (with a stop-loss order at $35.63 and a price target at $25.63) are justified from the risk/reward perspective.
The technical picture of the commodity didn’t change since Friday as U.S. markets were closed yesterday due to the Presidents' Day holiday. Nevertheless, earlier today, crude oil futures increased above $31 on news that oil ministers from Saudi Arabia, Russia, Venezuela and Qatar met in Doha. Although meeting participants agreed to freeze production at January levels (near record highs), they said that the deal was dependent on other producers joining in. Despite this positive signal, information that they didn’t cut production disappointed market participants, which resulted in reversal and a decline under the barrier of $30. Such price action suggests further deterioration, but we'll be able to say more after seeing today's closing prices and volume. Nevertheless, in our opinion, as long as crude oil does not close the day above the neck level of the head and shoulders formation, the pattern remains in place and we can expect lower crude oil prices in the coming days.
As always, we will keep you informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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