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

We've seen some pretty sharp oil moves in the latter half of last week. While they took oil above several resistance levels, the upswing appear to be facing resistance today. Therefore, the question regarding the move's sustainability springs to mind - and we deal with that in today's Alert. Logically, an important conclusion follows, and a new trading position appears not to be far behind. Get ready!

Let's take a closer look at the chart below.

Crude oil has moved sharply higher during Thursday's session, breaking above its early-June peaks. Friday's trading took black gold above the 50% Fibonacci retracement based on the entire April-June decline. The commodity has also tested the resistance area created by the 76.4% and 78.6% Fibonacci retracements.

Earlier today, oil bulls tried to go higher still but gave up all of their gains, and the oil price pulled back. As for the daily indicators, the CCI and Stochastics have reached their overbought areas, increasing the likelihood of a reversal in the very near future.

Should we see a daily close below the above-mentioned retracements, accompanied by both indicators' sell signals, we'll consider opening short positions.

Summing up, last week's oil trading brought sharply higher prices and black gold appears to be hesitating in the continuation of the move higher. Should we see the above-mentioned signs (highlighted in bold) of the bulls' weakness, we'll consider opening a short position. Until then, there's no opportunity worth acting upon in the oil arena.

Trading position (short-term; our opinion): No position is justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist