• 2 days How To Invest In The Cybersecurity Boom
  • 4 days Investors Are Patient With Unprofitable Giants
  • 6 days Wells Fargo Back In The Scandal Spotlight Once Again
  • 8 days 5 Stocks To Keep A Close Eye On This Year
  • 9 days As Auto Giants Flail, Look To Chip Stocks For Gains
  • 10 days Central America Is Ready For The Bitcoin Hustle
  • 12 days China’s Video Game Restrictions Unlikely To Slow Down Booming Industry
  • 13 days Top Performing Stocks As Inflation Fears Grow
  • 14 days US Airline Stocks Take A Beating On New EU Restrictions
  • 15 days This IPO Could Open Sustainable Fashion Floodgates
  • 16 days Crypto Crime Nets Another $2B Fraudster
  • 18 days This Week’s Hottest Meme Stocks
  • 19 days Why World Markets Should Be Watching Germany Closely
  • 21 days Could ‘Cultured’ Meat Rival The Plant-Based Megatrend?
  • 24 days ‘Easy Money’: Crypto Is Still Attracting Newbie Investors
  • 25 days Foreign Syndicates May Have Stolen Up To $400B In COVID Benefits
  • 26 days Gold Jumps Above $1800 Ahead Of Jackson Hole Summit
  • 26 days International Banks Blacklist Afghanistan Following Taliban Takeover
  • 28 days China’s Tycoons Are Getting A Serious Reality Check
  • 29 days U.S. Cannabis Space Heats Up With Telling Tilray Acquisition
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Nadia Simmons

Nadia Simmons

Nadia is a private investor and trader, dealing in stocks, currencies, and commodities. Using her background in technical analysis, she spends countless hours identifying market…

Contact Author

Przemyslaw Radomski

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…

Contact Author

  1. Home
  2. Markets
  3. Other

Oil Trading Alert: Is the Rally Over?

Trading position (short-term; our opinion): Long positions (stop loss at $37.23; initial upside target at $46.90) are justified from the risk/reward perspective.

Crude oil declined on Wednesday only to shoot up with vengeance yesterday, exceeding the previous August highs. Still, crude oil declined a bit before the session was over, so many investors are wondering if the rally is already over – is this the case?

Most likely – no. Let's take a closer look at the chart (charts courtesy of http://stockcharts.com).

Daily WTIC Chart
Larger Image

After closing the short positions in crude oil on August 1, we were waiting for a bullish confirmation and in August 9 Oil Trading Alert, we wrote the following:

From today's point of view, we see that the situation developed in line with the above scenario and crude oil extended gains yesterday. With Monday's increase, the commodity not only increased to our upside target, but also climbed higher and closed the day above the lower border of the black declining trend channel. In this way, light crude invalidated earlier breakdown under this short-term support, which in combination with buy signals generated by the daily indicators and invalidation of the breakdown under the 200-day moving average and a weekly closure above the long-term black declining line suggests further improvement in the coming days. If this is the case, and crude oil moves higher from here, we'll see an upward move to (at least) the upper border of the black declining trend channel (currently around $46.90) in near future.

In short, the above remains up-to-date, despite yesterday's upswing. The rally was sizable from a day-to-day perspective, but crude oil didn't reach even the closest of the more significant resistance levels. In our opinion – at this moment – it is most likely that crude oil will move to $50 or so and even if it doesn't, a move to a least $47 is still most likely as we don't have anything important enough to stop the black gold before it moves to this level.

Summing up, Tuesday's move lower turned out to be a correction within a short-term move higher and yesterday's rally just confirmed it. The short-term outlook remains bullish as the key resistance levels were not yet reached.

As always, we will keep you – our subscribers – updated.

Very short-term outlook: bullish
Short-term outlook: bullish
MT outlook: bullish
LT outlook: mixed

Trading position (short-term; our opinion): Long positions (with a stop loss order at $37.23 and initial upside target at $46.90) are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

As a reminder – "initial target price" means exactly that – an "initial" one, it's not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we've done previously). Stop-loss levels, however, are naturally not "initial", but something that, in our opinion, might be entered as an order.

Thank you.

 

Back to homepage

Leave a comment

Leave a comment