Trading position (short-term; our opinion; levels for crude oil's continuous futures contract): No positions are justified from the risk-reward perspective.
On a day-to-day basis, very little has changed in the crude oil technical picture, making it right to turn to our yesterday's Alert as it (translated into past tense) remains valid also today:
(...) After the big run-up after the surprisingly good employment numbers, crude oil paused... Or it has already topped. In our view, the latter is a bit more likely, but it still not certain enough for us just to short the crude oil market at this point.
Despite the decline that we saw this week, crude oil is still above the mid-March high, the 50% Fibonacci retracement level, and the rising short-term support line.
Until we get a breakdown below them, opening short positions is connected with risk that seems too big. This could change if we get some kind of important bearish confirmation.
If the black gold's rally continues, the natural upside target for it will be the upper border of the March price gap that is reinforced by the 61.8% Fibonacci retracement.
In our view, a breakdown back below the 50% Fibonacci retracement is more likely than a breakout above the 61.8% one, but we prefer to wait for the market to tell us where it really wants to move by breaking higher or lower, instead of trying to guesstimate it beforehand.
Summing up, the short-term outlook for crude oil is currently too unclear to justify any trading positions, but the bearish case seems a bit more likely than the bullish one at this time.
As always, we'll keep you - our subscribers - informed.
Trading position (short-term; our opinion; levels for crude oil's continuous futures contract): No positions are justified from the risk-reward perspective.
In case of the futures contracts that are more distant than the current contract, we think that adding the premium (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
