Oil Bulls Are Hesitating, Don’t You Think?

Today’s price action in oil may look to be boring at first sight, but it is far from being so. There appears to be pressure building under the surface. Actually, this chart situation is such that it leads us to open a new position. The bulls have been strong lately but look to be taking a breather now. Or, is that a breather? Figuring out the right answer is what today’s Alert, and the new position, is all about...

Let’s take a closer look at the chart below (chart courtesy of www.stockcharts.com ).

Crude oil opened Wednesday with another gap higher, and went on to extend gains in the following hours. Yesterday, it has moved slightly above its previous peaks, the yellow resistance zone and the 61.8% Fibonacci retracement, but the bulls have given up their gains before the day was over. This way, the earlier intraday breakouts have been invalidated.

The volume comparison also doesn’t attest to the bulls’ strength. Yesterday’s volume has been smaller than the day before, hinting at the buyers’ lack of conviction. Take a look at the relative position of the daily indicators relative to price throughout July – it’s a clear bearish divergence in both the CCI and Stochastic Oscillator, and the oil price. It increases the probability of reversal and another move to the downside in the very near future.

Summing up, despite the bullish upswing of recent days, the oil outlook remains bearish. Oil has reached a strong combination of resistances (the red resistance zone and the 61.8% Fibonacci retracement) and the bulls appear to have run out of steam. There’re bearish divergences between the CCI and oil prices, and between the Stochastic Oscillator and oil prices. The bulls appear to have run out of steam as also the volume comparison hints at, and reopening short positions is therefore justified.

The full analysis also covers the up-to-date action in the crude oil futures with additional chart feature commentaries, and the likely targets of the upcoming downside move. You are welcome to check more of our free articles on our website, including this one.  If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Oil Trading Alerts also benefit from the trading action we describe. We encourage you to sign up for our daily newsletter, too - it's free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up for the free newsletter today!

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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