Trading position (short-term; our opinion): Short positions (with a stop-loss order at $54 and the initial downside target at $46) are justified from the risk/reward perspective.

On Tuesday, black gold increased, but will oil bulls be strong enough to push the price of crude oil higher in the coming days?

Crude Oil’s Technical Picture

Let’s examine the technical picture of the commodity (charts courtesy of http://stockcharts.com).

Yesterday, crude oil increased above the May high and the upper border of the red resistance zone based on it once again, but will oil bulls manage to push the price of the commodity higher in the coming days?

In our opinion, it is quite doubtful, because there were similar situations in the previous weeks. As you see, despite earlier improvements, all attempts to move higher failed and black gold declined in the following days.

Why oil bulls have so many problems with this area? In our opinion, the answer to this question is on the medium-term chart below.

As you see on the weekly chart, the commodity increased once again to the yellow resistance zone, which is the major resistance since the beginning of the year. This area successfully stopped oil bulls in February, April, May and also in September, which means that as long as there is no breakout above it, the way to the higher prices will be closed and another reversal is just a matter of time.

Summing up, short positions continue to be justified from the risk/reward perspective as crude oil is still trading under the major resistance area, which successfully stopped increases many times earlier this year.

Very short-term outlook: mixed with bearish bias
Short-term outlook: bearish
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at $54 and the initial downside target at $46) are justified from the risk/reward perspective. We will keep you – our subscribers – informed should anything change.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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