Yesterday’s oil session was indeed heavy on action. The initial upswing gave way to a reversal lower, leaving black gold to close almost unchanged. Well, it finished a bit lower than it opened the day actually. Does this signify something important? That important that it would make us act? You bet – let’s dive in to the juicy details.

Let’s take a closer look at the chart below (chart courtesy of www.stooq.com ).

The oil bulls took black gold all the way to the orange resistance zone yesterday, just a bit shy of the 61.8% Fibonacci retracement. They didn’t hold on to the gained ground however, and oil closed the day slightly below the declining blue resistance line.

This is certainly similar to what we have seen recently. Let’s recall these words of our June 27th Alert – back then, crude oil futures have first hit the declining blue resistance line:

(…) Crude oil went on to test not only the late-May peak, but also the declining blue resistance line. Nevertheless, there was no daily close above the blue line. Instead, the bulls gave up half of their gains, and oil closed well below this resistance.

We have already seen a similar price action on May 20 and also the following day. Back then, such moves preceded a sizable downswing, which increases the likelihood of at least a brief reversal from current levels.

This suggests we could see further declines in the coming days, just like back then. Indeed, crude oil is trading at around $58.20 as we speak.

Earlier today, the bulls have failed to bring light crude prices higher for a fifth time in a row already. That also increases the probability of reversal’s sustainability and lower prices down the road.

Summing up, after yesterday’s session that ended almost in a draw, the bears are making themselves heard. The technical posture has deteriorated as crude oil has been rejected at the orange resistance zone yesterday and went on to trade solidly below the declining blue resistance line. The daily indicators complete the picture. Therefore, opening a short position is justified.

The full analysis also covers the evaluation of the daily indicators’ signals, aided by the recent fundamental news. You are welcome 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, 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!

Thank you.

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

* * * * *

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.

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

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.