Trading position (short-term; our opinion): Short positions (with a stop-loss order at $54 and the initial downside target at $45.80) are justified from the risk/reward perspective.

Although crude oil gained 1.62% and came back above the previously-broken levels yesterday, the commodity reversed and declined sharply earlier today. How low could black gold go?

Today’s alert is going to be very brief, because although crude oil moved higher yesterday, the commodity reversed and declined earlier today, erasing Thursday gains. This means that our downside targets from Monday Oil Trading Alert will likely be in play in the very near future:

If (…) crude oil declines from current levels, the initial downside target for oil bears will be around $49.85, where the previously-broken red declining line (which serves as the nearest support) is. If it’s broken, we’ll likely see a drop to the 38.2% Fibonacci retracement based on the June-September upward move (around $48.72) in the following days.

Summing up, short positions continue to be justified from the risk/reward perspective as crude oil extended losses, erasing yesterday’s gains, which together with the sell signals generated by the indicators suggest that further deterioration is just around the corner.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at $54 and the initial downside target at $45.80) 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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