Oil Trading Alert: Where Will Crude Oil Go From Here?

By: Nadia Simmons & Przemyslaw Radomski | Mon, Aug 11, 2014
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Oil Trading Alert originally published on Aug 11, 2014, 7:36 AM


 

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

On Friday, crude oil lost 0.28% as worries over the situation in Iraq and Ukraine waned. As a result, light crude reversed and re-tested the strength of the support zone. Will it stop further deterioration?

On Friday, the news that Russia had ended its military exercises near the Ukrainian border waned worries that further tensions between these countries could disrupt supplies from the region, which had a negative impact on the price of the commodity.

Additionally, U.S. President Barack Obama agreed to help the Iraqi air force coordinate attacks on Islamist militants in the north of the country by providing surveillance intelligence and target coordinates. These circumstances fueled hopes that strikes against insurgents will halt the advance from moving further south, where the country's main oilfields and export facilities are located.

As a reminder, the fact that Iraq's oil output hasn't been affected as the insurgency hasn't reached the southern part of the country encouraged oil investors to sell the commodity for profits and pushed the price of crude oil below $105 at the turn of June and July. Will history repeat itself once again and crude oil decline without disturbing news from the region? Before we know the answer to this question, let's examine the current technical picture of the commodity and find out if there's anything on the horizon that could drive the price higher or lower in the near future (charts courtesy of http://stockcharts.com).

$WTIC Light Crude Oil - Spot Price (EOD) CME
Larger Image

The situation in the long- and medium-term remains unchanged as crude oil is still trading in a narrow range, very close to important strong support levels. Therefore, what we wrote on Thursday is still up-to-date:

(...) Crude oil is very, very close to 2 strong support levels: the rising, long-term support line and the 200-week moving average. It seems that each of them could stop the most recent decline, or at least cause it to pause. Their combination, naturally, is even stronger. Consequently, the crude oil price is more likely to move at least temporarily higher shortly, even if the move doesn't take the commodity much higher.

Can we infer something more from the very short-term perspective? Let's examine the daily chart and find out.

$WTIC Light Crude Oil - Spot Price (EOD) CME
Larger Image

Quoting our last Oil Trading Alert:

(...) If crude oil moves higher from here, the first upside target will be the May low, which stopped further improvement at the beginning of the week. If it holds, we'll see a test of the strength of the recent lows (...)

On the above chart, we see that the situation developed in line with the above bearish scenario and crude oil came back to the green support zone. What's next for the commodity? Taking into account the medium-term situation and combining it with the current position of the indicators (the CCI and Stochastic Oscillator generated buy signals), we think that light crude will rebound from here and oil bulls will try to push the price above the nearest resistance once again. Nevertheless, as long as crude oil remains below it an attempt to test the recent low can't be ruled out.

Summing up, the overall situation hasn't changed much as crude oil is still trading in a narrow range between the support and resistance zones, slightly above the rising, long-term support line and the 200-week moving average. Therefore, we think that as long as there is no breakout or breakdown above/below one of these areas, another sizable is not likely to be seen and it's worth to stay on the sidelines waiting for another profitable buying or selling opportunity.

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

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

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
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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 © 2013-2014 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.

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