Crude Oil Price Reverses Lower Faster Than You Can Blink / Commodities / Crude Oil

Although oil bullsmanaged to push the futures higher and broke above the upper border of therising green trend channel during yesterday’s session, Monday’s upswing turnedout only temporary.

Earlier today, crudeoil futures opened the day with the bearish pink gap, invalidating yesterday’s breakout above the channel. This bearishdevelopment triggered further deterioration in the following hours, which meansthat our yesterday’s analysis is up-to-date also today:

(…) the sizable redgap remain in play. It keeps supporting the bears and lower values of thefutures in the coming week(s).

Let’s take a look atthe weekly crude oil chart. The volume is progressively declining, raisingdoubts about the bulls’ strength going forward.

Let’s zoom evenfurther out, and inspect the monthly chart.

The long-termperspective shows that recent weeks’ price action hasn’t really changed theoverall situation much. Crude oil is still trading inside the blueconsolidation below three key resistances (the red and orange bearishgaps and the 61.8% Fibonacci retracement), which form a major resistance zonefor the coming week(s).

Additionally, thevolume is decreasing on a monthly basis, which raises the probability of areversal in the near future.

Therefore, as long asthere is no breakout above the said consolidation, another move to the downsidewould not surprise us and reversal in the coming week(s) is very likely.

Taking all the above intoaccount, we continue to think that lower values of crude oil and crude oilfutures are ahead of us. Should it be the case and the futures move lower, thefirst downside target will be the green gap created on Thursday. If it isclosed, the next target will be the lower border of the purple consolidationand the next green gap, which is where our initial downside target currentlyis.

Summing up, yesterday’s crudeoil gains have evaporated in a flash as the red gap ahead coupled with theextended position of the daily indicators brought a reversal lower. The shortposition continues being justified from the risk-reward perspective, and it issupported by both the weekly and monthly perspectives.

We hope you enjoyed reading the above free analysis, and we encourage youto read today's Oil Trading Alert - this analysis' full version. It includesmore details about which levels to watch and why. There's no risk in subscribing right away, because there's a 30-daymoney back guarantee for all our products, so we encourage you to subscribe today.

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Nadia Simmons
Forex & Oil Trading Strategist
PrzemyslawRadomski
Founder, Editor-in-chief

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