Time to short Crude Oil? The technical Analysis Explained

 


Crude oil has recently been in a bull-run fueled by OPEC deciding to cut production by 1.2 million barrells per day. Nonetheless, I believe the current price of oil is unsustainable and we will soon see a reversal to the downside with a bear continuation, mainly due to technical analysis reasons. 

The following chart shows the daily price action of crude oil. 


As you can see, the price was not able to hold above the 200 SMMA and was rejected to the downside. This is a major bearish signal as the price falls below the long term average and continues its downtrend. 
According to technical analysis tenets, if today's price were to close below the 80.50 level (red line), the short position on oil would be confirmed with a take profit at the green line (73.14 level). If the price did not close below the 80.50 level, the short position would not be confirmed. 
For a safer position, oil could be shorted to fill the gap at 75.80 if the trader did not want to run as much risk for a 73.14 level. 

FOMC Meeting Driving Oil Price Decrease: 

  • Investors are expecting a nearly 86% probability of a 25 basis point hike during the next FOMC meeting, meaning that the demand for crude oil is likely to decrease if this were to happen. Hence, investors are taking profits after the latest oil price increment. 

THIS IS NOT FINANCIAL ADVICE. JUST MY OPINION ON A POSSIBLE SWING POSITION. 






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