Just like all good and bad things alike come to an end, so do “never-ending” rallies. Crude oil declined well over 5% today, which might mean that we already saw the end of the rally.
But did we certainly see it? Will crude oil be trading lower shortly?
Crude oil reversed without moving to the 50% Fibonacci retracement. It did encounter a resistance, though. The resistance was the highest daily close that we saw in the first half of March, right after the huge price gap.
That (March 10th) closing price was $34.36 and crude oil closed at $33.92 yesterday, after temporarily rallying to $34.66. This means that crude oil attempted to move above the above-mentioned resistance, and that it had failed.
This is a bearish sign, especially since it was followed by a sizable overnight decline.
Still, it’s not a proof that the next sizable decline is already underway – not yet. The close below the 38.2% Fibonacci retracement would make subsequent declines very likely, but given that the 50% retracement and the intraday, mid-March highs were not reached, it seems that crude oil could still launch another intraday rally before truly topping.
The monthly crude oil chart also suggests that crude oil hasn’t reached its key resistance level just yet, and therefore it’s not particularly likely to have topped right now.
Has crude oil topped yesterday? That’s quite possible. The answer as to whether it does or doesn’t justify opening a trading position.
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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.
This article was originally posted on FX Empire
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