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

Oil prices have been going down recently, and by quite a lot. But that's nothing compared to their Monday's performance. Facilitated by the Russia - Saudi Arabia fallout, black gold fell through the floor. What kind of chances of repairing the damage do the bulls have?

Let's take a closer look at the chart below (chart courtesy of www.stooq.com ).

From today's point of view, we see that the overall situation in crude oil futures hasn't changed much as they're still trading below the huge orange gap created at the beginning of Monday.

Therefore, as long as it remains open, the way to the north is closed. Nevertheless, taking into account today's open and the green bullish gap, it seems that the buyers may try to push the futures higher.

Should we see such price action, we can expect a dead cat bounce pattern - a small, short-lived recovery in the price, which could take crude oil futures to the 50% ($37.09) or even the 61.8% ($38.07) Fibonacci retracement (based on the gap range) in the following day(s). At this point, it is also worth noting that the greater the decline, the greater the rebound we can expect, which means that an attempt to close the orange gap cannot be ruled out.

Summing up, the situation is too unclear for any trading positions to be justified. We will keep monitoring the market and report to you accordingly.

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

Thank you.

Nadia Simmons
Day Trading and Oil Trading Strategist

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager