Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Soybean Price Hits 9 Year Low Due to Trade War - 24th Jun 18
Small Cap Stocks, Technology and Pharma To Drive A Renewed Market Rally - 24th Jun 18
Gerald Celente: Why You Still Need Guns, Gold, and a Getaway Plan... - 23rd Jun 18
Cheap Gold Stocks Bottom Basing - 23rd Jun 18
A Trade War Won’t Be Good for the US Dollar - 23rd Jun 18
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Crude Oil Price Invalidated Breakout – What’s next?

Commodities / Crude Oil Sep 12, 2017 - 03:13 PM GMT

By: Nadia_Simmons

Commodities

On Friday, crude oil moved sharply lower and lost over 3% after investors digested the EIA report and reacted to the increase in crude oil inventories. Thanks to these circumstances, light crude invalidated the earlier breakout above the resistance area and slipped well below $48. What does it mean for the commodity?


Crude Oil’s Technical Picture

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

On Thursday, we wrote that crude oil extended gains, but did this increase change anything? In our opinion, it didn’t. Why? As you see on the weekly chart, despite Wednesday’s move, the black gold is still trading under the purple declining resistance line based on the previous highs and the 50-week moving average, which together were strong enough to stop oil bulls in the previous months.

Additionally, the commodity increased to two important lines: the orange resistance line based on the August highs and the previously-broken lower border of the purple rising trend channel, which increases the probability of reversal – especially when we factor in the size of yesterday’s volume. (…) Wednesday’s move materialized on visibly lower volume than Tuesday’s increase, which raises some doubts about oil bulls’ strength (similarly to what we saw in mid-August).

What’s next for light crude?

(…) if the commodity increases to the lower border of the purple rising trend channel and then reverses and declines, we will see another verification of the earlier breakdown under this short-term resistance, which will give oil bears a very important reason to act in the following days.

From today’s point of view, we see that the situation developed in line with the above scenario as crude oil reversed and declined sharply on Friday. Thanks to this drop light crude created a bearish candle on the weekly chart (visibly longer upper shadow suggests a turning point), which verified the earlier breakdown below the long-term purple declining resistance line (based on the February and April highs) and the 50-week moving average once again. Taking this bearish development into account and combining it with the sell signal generated by the weekly Stochastic Oscillator, we think that further deterioration is more likely than not.

When we take a closer look at the daily chart, we can easily notice more bearish factors. As we assumed in our Thursday’s alert, crude oil reversed and declined after an increase to the lower border of the purple rising trend channel, which resulted in another verification of the earlier breakdown under this short-term resistance. Additionally, the commodity invalidated the earlier breakout above the red resistance zone and closed the day below it. On top of that, CCI and the Stochastic Oscillator generated the sell signals, supporting oil bears and further deterioration.

How low could the commodity go in the coming days?

In our opinion, if light crude declines under the Friday low of $47.27, the next downside target will the August low (around $45.58) or even the 61.8% Fibonacci retracement and the late July low (around $45.26-$45.40).

Summing up, profitable short positions continue to be justified from the risk/reward perspective as crude oil moved sharply lower after another verification of the breakdown below the medium-term purple declining resistance line based on the February and April highs, the 50-week moving average and the lower border of the purple rising trend channel. Additionally, the weekly Stochastic Oscillator and both daily indictors generated the sell signals, supporting further deterioration in the coming week.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – 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 Oil Trading Alerts as well as Gold & Silver Trading Alerts. Sign up now.

Nadia Simmons
Forex & Oil Trading Strategist

Sunshine Profits: Gold & Silver, Forex, Bitcoin, Crude Oil & Stocks
Stay updated: sign up for our free mailing list today

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Nadia Simmons 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, Nadia Simmons 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. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons’ 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. Nadia Simmons, 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.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules