Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): Full (100% of the regular position size) speculative short positions in crude oil are justified from the risk to reward point of view stop loss $45.63 at and $30.22 as the initial target price.
In tune with our previous expectations, yesterday, crude oil declined, which consequently made your profits on this short position much higher. And they are likely to be even higher in the upcoming weeks. We’ve just witnessed an additional indication which supports this outcome. Namely, crude oil has just closed the day below the lowest daily close of September. This means that we saw a breakdown not only in terms of intraday prices, but also in terms of the daily closing prices. Thus, with each passing day, the short-term outlook is getting more bearish.
It’s important to note that yesterday’s decline in the black gold happened without the stock market’s help. In fact, the latter moved a bit higher yesterday. This weakness of crude oil is very bearish, especially since it makes the current situation similar to what we’ve witnessed in March. Back then, crude oil also showed exceptional weakness.
From the broad perspective, crude oil corrected about 61.8% of the initial 2020 slide and it seems now ready to slide once again.
To summarize, for the upcoming weeks, the outlook for crude oil remains bearish.
As always, we’ll keep you, our subscribers well informed.
Trading position (short-term; our opinion; levels for crude oil’s continuous futures contract): Full (100% of the regular position size) speculative short positions in crude oil are justified from the risk to reward point of view stop loss $45.63 at and $30.22 as the initial target price.
In the future contracts that are more distant than the current contract, we think adding the premium (the difference between the July and other contracts) to both: stop-loss and initial target prices is justified.
Thank you.
Nadia Simmons
Day Trading and Oil Trading Strategist
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
