Trading position (short-term; our opinion): Short positions (with a stop-loss order at $56.45 and an initial downside target at $45.81) are justified from the risk/reward perspective.
On Wednesday, crude oil moved higher after the U.S. Energy Information Administration reported that crude oil inventories increased less-than-expected in the previous week. Earlier today, the black gold extended gains, climbing above the barrier of $50. How high could the commodity go?
Let’s examine the chart below to find out (charts courtesy of http://stockcharts.com).
Based only on yesterday’s price action we could write that not much changed. However, earlier today, crude oil came back above the previously-broken barrier of $50. With this increase, the black gold approached the 50% Fibonacci retracement based on the March 7 – March 22 downward move, which could stop further rally – especially when we take into account the fact that not far from current levels are January lows. Additionally, an invalidation of the breakdown under the level of $50 is not confirmed by a daily closure, which means that the short-term perspective didn’t change and remains bearish at the moment of writing these words.
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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