The Oil Bears Punished The Bulls’ Hesitation. What Now?

Oil has decidedly moved yesterday, and the closing price didn’t make the bulls happy. They haven’t had much success repairing the damage earlier today, though. Does it mean that the bears can set their sights even lower now? Can geopolitical events, or any other factors come to the rescue of the bulls?

Let’s take a closer look at the charts below (charts courtesy of http://stockcharts.com and www.stooq.com ).

Yesterday, we wrote that:

(…) the bulls didn’t have much success breaking above the yellow resistance zone. The commodity reversed and invalidated two earlier tiny intraday breakouts: above the yellow resistance and above the 61.8% Fibonacci retracement.

The CCI and the Stochastic Oscillator generated their sell signals, encouraging the sellers. The volume picked up, suggesting that another downswing may be just around the corner.

Crude oil has finished yesterday’s session sharply lower, slipping below $58 and making our short position even more profitable. That also marks a close below the 50-day moving average, which is another bearish factor to boot.

The volume comparison also speaks loudly – increasing volume of the downswing attests to the bears’ strength and involvement. Both the CCI and the Stochastic Oscillator have generated their sell signals, lending further support to the bears.

Summing up, after a couple of days of sideways trading, oil plunged yesterday. It happened on strong volume and after black gold had been unable to overcome a strong combination of resistances (the red resistance zone and the 61.8% Fibonacci retracement) earlier this week. The bearish divergences remain in force: both between the CCI and oil prices, and between the Stochastic Oscillator and oil prices. All the above support the bears, and the short position remains justified.

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 to also benefit from the trading action we describe. Check more of our free articles on our website, including this one (it covers today’s pre-market action and the very short-term perspective it brings to the table) – just drop by and have a look. 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. On top, you’ll also get 7 days of instant email notifications the moment a new Signal is posted, bringing our Day Trading Signals at your fingertips. 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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