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

Although crude oil moved higher after yesterday’s open, the previously-broken long-term support/resistance line stopped oil bulls, triggering a pullback. Does it mean that another downswing is just around the corner?

Let’s take a closer look at the charts and find out (charts courtesy of http://stockcharts.com).

From today’s point of view, we see that the overall situation hasn’t changed much, because although crude oil moved higher after yesterday’s open, the previously-broken long-term green line stopped oil bulls, triggering a pullback. As a result, light crude closed the day under this resistance, which suggests that our last commentary remains up-to-date also today:

(…) crude oil (…) climbed to our first upside target - the long-term green line based on the August and November lows.

What’s next? On one hand, the buy signals generated by the indicators (…) suggest further improvement in the coming days. However, on the other hand, Wednesday’s move looks like a verification of the breakdown under the long-term green line, which could encourage oil bears to act and result in a comeback to the previously-broken lower border of the red declining trend channel.

Additionally, it’s worth noting that the size of volume, which accompanied yesterday’s increase was smaller than day earlier, which increases the probability that oil bears will try to push the black gold lower in the coming days (even if we see a re-test of the long-term green line first).

Summing up, crude oil increased to the long-term green line once again, which looks like a verification of the earlier breakdown and increases the probability of a pullback in the coming day(s).

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
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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