Trading position (short-term; our opinion): Short positions in crude oil (100% size of the regular trading position) are justified from the risk to reward point of view with $11.22 as the binding profit-take level, and with $30.23 as the stop-loss level.

Crude oil bulls just couldn't maintain momentum of two preceding sessions, and black gold looks to have its gains capped. For now, or for good before new lows are reached?

Let's start today's analysis with the long-term (chart courtesy of http://stockcharts.com and www.stooq.com ).

Looking at the above chart, we see that although crude oil futures moved higher during yesterday's session, the upper border of the red gap stopped the buyers, triggering a quite sharp pullback before the day was over.

Despite this failure, crude oil futures opened Tuesday with a green bullish gap, which could encourage the buyers to move to the upper line of the red gap once again - especially when we take into account buy signals generated by the daily indicators.

Nevertheless, even if we see such price action, let's remember our yesterday's observations:

(...) crude oil futures opened this week with a quite big red gap, which serves now as the nearest short-term resistance. Therefore, as long as it remains open, a reversal from current levels and another attempt to move lower is very likely - especially when we factor in an invalidation of Friday's breakout above the upper border of the blue consolidation and the March 20 peak.

(...) Nevertheless, (...) if the bulls manage to close (...) gap (...) and push the futures higher, they will have to beat the nearest very short-term resistance - the 61.8% Fibonacci retracement at around $29.70.

If they win, the way to the next resistance area (around $32.70-$34.60) or even the 38.2% Fibonacci retracement (based on the entire January-March downward move) could be open.

Therefore, keeping an eye on today's closing price can determine further increases or decreases in the coming days. Stay tuned.

Summing up, it could be the case that crude oil's rally is already over, but it could also be the case that the very short-term outlook changes shortly. We are moving the stop-loss level a bit higher, to better align it with the short-term Fibonacci retracement level.

Trading position (short-term; our opinion): Short positions in crude oil (100% size of the regular trading position) are justified from the risk to reward point of view with $11.22 as the binding profit-take level, and with $30.23as the stop-loss level.

Thank you.

Nadia Simmons
Day Trading and Oil Trading Strategist

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