Trading position (short-term; our opinion): Short position with a fresh stop-loss order at $60.55 and the next downside target at $54.47 is justified from the risk/reward perspective.

Neither yesterday has brought nor today looks to be likely to bring a groundbreaking move in oil. Yet, that doesn't mean that its price action is of little significance. To the contrary, subtle clues abound. Time to inspect the balance of forces and what it means to our open position.

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

While crude oil futures moved higher yesterday, the shape of the candle smells of a reversal. The bulls have taken black gold slightly above the declining blue resistance line only to give up all of their gains, thus invalidating the earlier tiny intraday breakout.

Oil has finished the day below the resistance, and earlier today, we have seen another upswing attempt. It looks to have fizzled out as black gold changes hands at around $57.50 currently.

Connecting the dots, another move to the downside remains likely as long as there is no daily close above the declining blue resistance line. Should it be the case, we're likely to see a test of last week's lows in the coming days.

Summing up, while oil prices look to have stabilized, the calm in the oil arena appears deceiving. The bulls haven't overcome any nearby resistances, and the bears appear on the verge of probing their defenses. The daily indicators' sell signals support the bears, and our profitable short position remains justified. As always, we'll keep you - our subscribers - informed.

Trading position (short-term; our opinion): Short position with a fresh stop-loss order at $60.55 and the next downside target at $54.47 is justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist