Oil Trading Alert: Crude Oil Reverses - Was that THE Bottom?

By: Nadia Simmons & Przemyslaw Radomski | Thu, Aug 13, 2015
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Oil Trading Alert originally published on Aug 12, 2015, 11:51 AM


 

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

Crude oil declined yesterday, but the session was not without a rebound. In fact, the move higher continues also today as black gold is at almost $44. Have we just seen a major triple bottom in crude oil?

This could be the case, but for now it's not very likely. We are not seeing substantial signs of strength while we should have been seeing them it if we were after a major bottom. It seems likely, however, that we are seeing a local bottom. Let's take a closer look at the charts to find out (charts courtesy of http://stockcharts.com).

Light Crude Oil Daily Chart
Larger Image

In our previous commentary, we wrote the following:

(...) Crude oil is about to reach its strong support, so we can expect to see a corrective upswing relatively soon (...) Precisely, crude oil moved below the first of the horizontal support levels, but is about to reach the combination of the second one (Jan 2015 low) and the declining red support line, which could trigger a bigger corrective upswing.

From today's point of view, we see that the commodity reversed and rebounded after a drop to the above-mentioned support area. Thanks to this upswing, light crude invalidated earlier breakdown under the first of the horizontal lines and the green support/resistance line based on the previous lows. This is a positive signal, which suggests that we could see further improvement - especially when we factor in the size of volume that accompanied yesterday's move (it was much bigger compared to what we saw in previous days). Additionally, the RSI and Stochastic Oscillator generated buy signals, suggesting that reversal may be just around the corner.

If this is the case and the commodity increases from here, the initial upside target would be around $45.52, where the upper line of the blue declining trend channel is. However, if this resistance is broken (and given the significance of the support levels that are being currently reached it seems quite likely that it will be broken), the next upside target would be around $47.05-$47.71, where the Apr low and the 23.6% Fibonacci retracement (based on the entire Jun-Aug decline) are.

The above remains up-to-date. Crude oil moved once again to the declining red support line and reversed. It continues to rally also today (being at $43.70 at the moment of writing these words) and while a daily rally is not very significant on its own, in light of the support levels that were just reached, it is a bullish signal.

Summing up, the situation in crude oil is now more bullish than not for the short term, but it's not bullish yet to justify opening long positions in our opinion. We believe that the outlook for crude oil is not bearish enough to justify opening another short positions either. In fact, we believe that taking profits off the table yesterday was a good idea. We will continue to monitor the market, look for another profitable trading opportunity and report to you accordingly.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed with bearish bias
LT outlook: mixed with bearish bias

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you - our subscribers - informed should anything change.

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
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Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

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's 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.

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Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: 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.

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