Upside Reversal After The Slide, Yet Did The Oil Outlook Change?

Let's take a closer look at the chart below (chart courtesy of www.stooq.com) and assess the likely crude oil price path ahead.

While crude oil futures closed below the lower border of the rising purple trend channel and attempted to move even lower yesterday, the bulls made a real comeback on the heels of the Energy Information Administration's report showing a smaller-than-expected build in weekly U.S. crude stockpiles.

As a result, the futures erased Tuesday's decline and returned to trade above $56. The bulls however couldn't close Tuesday's red gap. As long as it remains open, it works to support the bears and acts as resistance to the attempts to move north.

The sell signals of the daily indicators continue to support an upcoming move lower. Should the futures decline, the bears will likely not only test the lower border of the rising purple trend channel, but also yesterday's low in the very near future. If that is broken, the next stop for the sellers will be around $53.73-$54.13, right at the late October lows.

Summing up, spurred by the EIA inventory report, crude oil reversed higher yesterday. While the upswing managed to erase Tuesday's losses, the daily indicators point in the direction of forthcoming deterioration. This would also be supported by the still open Tuesday's bearish gap. The short position remains justified.

We hope you enjoyed reading the above free analysis, and we encourage you to read today's Oil Trading Alert - this analysis' full version. It includes more details about which levels to watch and why. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to subscribe today.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist

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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 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.