Told You So: The Bearish Momentum in Crude Oil Accelerates / Commodities / Crude Oil

Oil price is melting down like there’s no tomorrow. How else could wedescribe the bloodbath? Fresh monthly lows being hit on a daily basis. Slicingthrough important supports. With such a weak close to the trading week, howwill black gold fare the next one? Clearly, the most recent Mexico tariffannouncement hasn’t helped and it’s widely felt in the markets, including thisone. Better news on the horizon?

Let’s takea closer look at the chart below (charts courtesy of http://stockcharts.comand www.stooq.com).

We wrotethese words yesterday:

(…) Afterhitting a fresh May low, black gold (…) rose not only above last week's lows,but also returned back inside the declining blue trend channel.

This way, crudeoil has invalidated two earlier breakdowns. While this may seem bullish on thesurface, (…) we have already seen something similar not so long ago.

(…) thebreakout attempt above the 38.2% Fibonacci retracement evaporated. Such a swiftreversal increases the likelihood of further deterioration targeting at least atest of the lower border of the blue declining trend channel in the very nearfuture.

The bullshave been unable to reach the 38.2% Fibonacci retracement yesterday and crude oil price went on to slide belowprevious day’s intraday lows.

Black gold has closed the day notonly below Wednesday’s lows, but also below the 38.2% Fibonacci retracement (marked with green). The situationdoesn’t look good for the bulls in the coming day(s).

This viewis supported by looking at today’s crude oil futures action so far:

Lightcrude has opened today with another red gap. The losing streak continues andthe bearish overtones are very much on – just look at the current oil price of$55.00 approximately. It’s a fresh May low, approaching our next downsidetarget – the green support zone based on the 50% Fibonacci retracementand the late-February lows.

Should thecommodity continue on its downward path, it’s high time to think about thedownside targets. Take a look at our website for more. You’ll find there sometimeless and fitting trading wisdom for a situation like this, too.

Summingup, the outlook for oil is bearish. Yesterday, the bullshave been finally unable to stop the bearish momentum. Black gold continues totrade lower, making our short position increasingly profitable – literally dayby day. The weekly indicators and volume comparison continue to support lowerprices and the daily picture concurs. Our downside targets are within aspitting distance and the short position continues to be justified.

The full analysis covers also the targets of this downside move. You arewelcome to check more of our free articles on our website, including this one.If you enjoyed the above analysis and would like to receive free follow-ups, weencourage you to sign up for our daily newsletter - it's free and if you don'tlike it, you can unsubscribe with just 2 clicks. If you sign up today, you'llalso get 7 days of free access to our premium daily Oil Trading Alerts as wellas Gold & Silver Trading Alerts. Sign up now!

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Sunshine Profits -Effective Investments through Diligence and Care

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All essays, research andinformation found above represent analyses and opinions of Przemyslaw Radomski,CFA and Sunshine Profits' associates only. As such, it may prove wrong and be asubject to change without notice. Opinions and analyses were based on dataavailable to authors of respective essays at the time of writing. Although theinformation provided above is based on careful research and sources that arebelieved to be accurate, Przemyslaw Radomski, CFA and his associates do notguarantee the accuracy or thoroughness of the data or information reported. Theopinions published above are neither an offer nor a recommendation to purchaseor sell any securities. Mr. Radomski is not a Registered Securities Advisor. Byreading Przemyslaw Radomski's, CFA reports you fully agree that he will not beheld responsible or liable for any decisions you make regarding any informationprovided in these reports. Investing, trading and speculation in any financialmarkets may involve high risk of loss. Przemyslaw Radomski, CFA, SunshineProfits' employees and affiliates as well as members of their families may havea short or long position in any securities, including those mentioned in any ofthe reports or essays, and may make additional purchases and/or sales of thosesecurities without notice.

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