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

On Thursday, crude oil wavered around the short-term support/resistance line, but finally closed the day above it. Does it mean that we’ll see a re-test of the 2017 peaks?

Crude Oil’s Technical Picture

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

Looking at the charts, we see that the overall situation in the short term hasn’t changed much, because crude oil is still trading around the upper blue support/resistance line. Therefore, we believe that our last commentary remains up-to-date also today:

(…) What’s next for the commodity? On one hand, yesterday drop could be a verification of the earlier breakout, which could turn into one more upswing and re-test of 2017 high.

However, on the other hand, this is a repeat of what we already saw earlier this year (the February peak) and there are no bullish implications of this move. Additionally (…) this scenario is also reinforced by the current position of the daily indicators (we saw such high readings before important reversal in the previous months) and the situation on the medium-term chart (…) - black gold remains in the yellow resistance zone, which stopped oil bulls several times in the previous months. Additionally, the RSI, the CCI and the Stochastic Oscillator climbed to the levels seen at the beginning of the year, which suggests that another reversal may be just around the corner.

(…) we would also like to draw your attention to the size of volume, which accompanied recent upswings. As you see, it visibly declines since the beginning of the week, which suggests that oil bulls may run out of steam and increases the probability of lower prices of crude oil in the very near future.

(…) yesterday drop materialized on significant volume, suggesting that oil bears may getting stronger, which could result further deterioration in the very near future.

Summing up, crude oil is still trading around the upper blue support/resistance line in the key resistance zone, which together with the current position of the indicators and the size of volume increase the probability of reversal in the following days.

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

Trading position (short-term; our opinion): No positions 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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