Oil Trading Alert: Time for Reversal?

By: Nadia Simmons & Przemyslaw Radomski | Wed, Aug 19, 2015
Print Email

Oil Trading Alert originally published on Aug 19, 2015, 8:20 AM


 

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

On Tuesday, crude oil gained 1.17% as hopes that crude oil inventories could decline for a third consecutive week weighed on investors' sentiment. Thanks to these circumstances, light crude bounced off its key support line, but will we see the commodity above $43 in near future?

Yesterday, the Commerce Department showed that housing starts rose 0.2% to the highest level since October 2007, which pushed the USD Index above 97. What's interesting, although the greenback moved higher against other currencies, crude oil didn't extend its losses, showing some strength. Does it mean that investors' sentiment has improved and higher values of the commodity are ahead us? Let's examine the technical picture of light crude and find out where it will head next (charts courtesy of http://stockcharts.com).

Light Crude Oil Daily Chart
Larger Image

From today's point of view we see that although crude oil moved little lower after the market's open, the combination of the recent multi-month low and the key support line (marked with red) encouraged oil bulls to act. As a result, light crude rebounded and climbed above the previously-broken March low, hitting an intraday high of $42.90.

Despite this increase, the proximity to the nearest solid resistance zone (created by the green and blue lines) triggered a pullback and the commodity closed the day a few cents below the March low. What's next? Taking into the current position of the indictors (there are positive divergences and the Stochastic Oscillator generated a buy signal - not strong, but still) it seems that the space for declines is limited and further improvement is just around the corner.

Nevertheless, in our opinion, as long as there is no invalidation of the breakdown under green and blue lines, higher prices of the commodity are questionable and another test of the red declining support line (currently around $41.16) can't be ruled out. However, if oil bulls manage to push crude oil above $43-$43.58, the way to $45.34 (the Aug 11 high) would be open.

Finishing today's alert please note that yesterday, after the market's open, the American Petroleum Institute reported that crude oil inventories declined by 2.3 million barrels last week, beating expectations for a 2.0 million barrel drop. If today's EIA report confirms another drop (or shows a bigger-than-expected decline), oil bulls would have another argument to push the commodity higher.

Summing up, crude oil bounced off the recent low and the key support line, closing the day slightly below the March low. Taking this fact into account, and combining with the current position of the indicators (and another weekly drop in crude oil inventories showed by the API), it seems to us that oil bulls will try to push the commodity higher. Nevertheless, the outlook for crude oil is not clear enough to justify opening any positions. 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.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts

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.

Copyright © 2013-2017 Sunshine Profits

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

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.

Copyright © 2009-2017 Przemyslaw Radomski, CFA

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com