The Expected Oil Reversal

On Friday, we wrote:

(…) Crude oil futures moved higher once again during yesterday’s session, overcoming the upper border of the rising green trend channel for the third time in a row. While the futures finished the day above this resistance, the bulls didn’t manage to hold gained ground in full.

Earlier today, the futures opened with the red gap. This bearish development means invalidation of yesterday’s breakout, which doesn’t bode well for the bulls.

The daily indicators are still very extended, also supporting the likelihood of upcoming resolution to the downside.

The situation indeed developed in tune with the above, and crude oil futures extended losses after our Alert was posted. Friday’s drop took black gold slightly below the upper border of the purple consolidation, which means invalidation of the earlier breakout above it. This is an additional bearish development.

Further deterioration followed earlier today, which suggests that lower prices are probably just around the corner. This is especially the case when we factor in the sell signals generated by the daily indicators.

Should it be the case and the futures extended losses from here, the initial downside target for the sellers will be the Friday’s green gap.

Summing up, the bulls ran out of steam on Friday, and a reversal lower followed. The result has been invalidation of the breakout above the purple consolidation. Today’s bearish gap at the open supports downswing’s continuation, and so do the sell signals of the daily indicators. The short position continues being justified from the risk-reward perspective.

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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.

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