The Bulls Still Appear Short of Breath. And Quote a Lot So.

Yet, they have taken black gold higher from its daily lows already – does this mark some kind of a turning point?

Let’s take a closer look at the charts below:

While crude oil moved to the upside right after yesterday’s open, the bulls didn’t manage to break above the red resistance line for the third time in a row.

The subsequent pullback took the commodity below the pink resistance line, and it closed the day below this resistance. It also marks yet another daily close below the 50- and 200-day moving averages.

The implications of all of these are bearish. But let’s check today’s price action in the oil futures arena.

Earlier today, crude oil futures opened below the upper border of the red declining trend channel and then moved slightly lower. Since then, they’ve decline further and currently trade at around $54.60.

The Stochastic Oscillator has issued its sell signal, which together suggests a drop to at least the lower border of the blue consolidation in the very near future. And indeed, black gold has almost touched the $53.40 handle earlier today.

If the lower border of the blue consolidation is broken, it would open not only the way to our initial downside target abut also to around $51 – there, the size of the downward move would correspond to the height of the consolidation.

Summing up, the oil downswing has continued yesterday despite the bulls’ best efforts. The buyers’ intraday breakout attempts above several important resistances have been invalidated. The continued combined technical factors of multiple resistances, the Stochastic Oscillator’s sell signal and the 4-hour chart daily indicators’ sell signals indicate that a continuation of yesterday’s oil downswing is very likely, and our profitable short position remains justified.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist

Sunshine Profits – Tools for Effective Gold & Silver Investments

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.