Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
On Wednesday, crude oil extended gains and hit a fresh 2018 peak, but is the road to the level of $70 really open?
Let’s take a look at the charts below (charts courtesy of http://stockcharts.com) and find out what are they saying.
In our yesterday’s alert, we wrote the following:
(…) please keep in mind that volume, which accompanied yesterday’s move was quite big, which together with a buy signal generated by the Stochastic Oscillator suggests that one more upswing and a test of the 200-month moving average seen on the long-term chart below can’t be ruled out.
From today’s point of view, we see that the situation developed in line with the above scenario and crude oil not only climbed to our upside target, but also broke above it. In this way, black gold opened the way to the barrier of $70, but whether oil bulls meet any resistance on their way to the north or not?
Let’s take a closer look at the daily chart and try to find clues about future moves.
Looking at the daily chart, we see that yesterday’s upswing materialized on significant volume, which together with the above-mentioned breakout above the 200-month moving average and the buy signal generated by the Stochastic Oscillators suggests that we’ll see a test of the upper border of the blue rising trend channel in the coming days.
Nevertheless, in our opinion, as long as this resistance remains in the cards oil bulls will not reach the barrier of $70. Finishing today’s alert, it’s worth noting that there are clearly visible strong bearish divergences between all daily indicators and the price of the commodity, which indicates that reversal may be just around the corner.
As always, we’ll keep you - our subscribers - informed should anything change, or should we see a confirmation/invalidation of the above.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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