Making Sense of Crude Oil Price Narrow Trading Range / Commodities / Crude Oil

Wepreviously wrote that while it was tempting to bet on crude oil’s prices due totheir weakness, it was not a good idea from the risk to reward point of view,as black gold didn’t invalidate the breakout above the early-March high. And itwas definitely a good idea not to enter a short position then either – crudeoil moved higher since that time.

Atthe moment of writing these words, crude oil is attempting to break above theprevious highs after verifying the breakout above the 50% Fibonacciretracement level. It also bounced off the mid-March highs and thelower border of the price gap, in which it’s currently trading.

Rightnow, crude oil is trying to break above the previous June highs, the upperborder of the March price gap and the 61.8% Fibonacciretracement. If it manages to break above them, we will consideropening a long position.

Still,it seems more likely to us that this attempt to break higher will not besuccessful and that the price of blackgold will tumble instead. It’s not likely enough for us to open ashort position at this time, though.

From the long-term point of view, we see something similar, but basedon different support and resistance levels.

The breakout that was recently confirmed, was the comeback above thelower border of the previous trading channel, and the resistance that crude oildidn’t break is provided by the mid-2016 and 2017 lows. The upper border of theprice gap is also clear on the above chart, but we already discussed itpreviously.

Either way, it seems that the situation in crude oil is unclear at thistime, but we expect it to clarify shortly.

Summing up,the short-term outlook for crude oilis currently too unclear to justify any trading positions, but the bearish caseseems more likely than the bullish one at this time.

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

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