Is Oil On the Way Up Now?

Crude oil soared higher yesterday and also in today’s pre-market trading, which shows you why it was a good idea to remain cautious yesterday, even despite crude oil’s breakdown below the rising support line.

We previously wrote the following:

We saw a tiny breakdown on Wednesday, but it was not based on the decisive move lower, but rather based on the fact that time passed and the next daily candlestick started below the line. While this makes the outlook more bearish than on Tuesday, the breakdown is not confirmed and we think that the outlook is not bearish enough yet to justify opening a trading position at this time.

Unless crude oil moves sharply higher today, the breakdown will be confirmed, which will be bearish. However, since crude oil just managed to break to a new monthly high, the bearish implications of the above-mentioned breakdown will be nullified by the bullish implications of the breakout above previous May highs.

The above means that “when in doubt, stay out” phrase should now be applied, but at the same time, we think that a more decisive signal might present itself shortly. This is due to the proximity to the 38.2% Fibonacci retracement level based on the previous decline in crude oil. As this retracement is very close to the April highs at about $29 level, it means that this strong resistance area, which is confirmed by two resistance levels, might be able to either trigger a reversal or prove that crude oil is particularly strong right now – if it manages to break above it.

Summing up, depending on the way crude oil behaves relative to its nearby resistance level provided by the early-April highs and the 38.2% Fibonacci retracement based on the entire 2020 decline, we might get an opportunity to enter long, or short positions very soon, and increase our 2020 profits.

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Thank you.

Nadia Simmons

Day Trading and Oil Trading Strategist

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

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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 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.