• 3 hours Even Banks Can't Answer Aramco's Trillion Dollar Question
  • 20 hours Will Bezos Buy The Seattle Seahawks?
  • 1 day 6 Tech Trends Transforming The Travel Industry
  • 2 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 2 days Trump Prepares For Another Key Tariff Decision
  • 2 days The Free Money Bubble Is About To Burst
  • 3 days The Crushing Reality Of Poverty In America
  • 3 days Should You Buy Into The World’s Largest IPO?
  • 3 days The Infinite Possibilities Of Cosmic Energy
  • 4 days Analysts Link Walking To Economic Growth
  • 5 days Will Japan Turn Its Back On The Aramco IPO?
  • 6 days Global Debt Soars To $188 Trillion
  • 6 days The World's Largest Gold Miners Are Getting Creative
  • 7 days Twitter: The Saudi Spy Tool To Bring Down Dissidents
  • 7 days Broad Commodity Funds Don’t Give Enough Exposure To Gold
  • 8 days Here We Go Again: Another Giant Telecoms Mega-Merger
  • 8 days World's Largest Gold Miner Sees Profits Triple
  • 9 days Microsoft Japan Trials 4 Day Work Weeks, Productivity Soars By 40%
  • 9 days Hedge Funds Lose $4 Billion In Four Days As California Wildfires Rage On
  • 10 days New Viral App May Be A National Security Threat In Disguise
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

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