From couple of days except yesterday we have seen tug of war between bulls and bears where bulls were unable to move above the $60 and bears were unable to take it below $58 level due to which we have so many choppy sessions in the market. Well there was high probability for the downfall as crude as arrived near 200SMA line which was key resistance level so we are supporting the downside momentum.
Yesterday from starting of the day we have seen bearish sentiments and bears dominated the bulls completely where a bearish marabuzo candlestick in the form of bearish engulfing candlestick can be seen on the chart. Well it’s just a starting of journey further downfall is still awaited where bears may test the $50 in coming days. A daily closing below $55 level will confirm the bearish momentum and we may see further downfall till $50 and furthermore.
If other thing remains constant then from technical point of view crude seems weak on the chart so traders and investors are advised to go for short with strict stop loss of $60. The risk and rewards ratio is also favoring the short position at current levels. By applying the Fibonacci retracement line we may witness that crude has retraced almost 61% which is known as golden retracement and from here it starts to move south side.
The Parabolic SAR is also favoring the bears and providing us trend reversal signal. RSI has also turned down below 50 levels which is providing us bearish signal from negative territory. MACD indicator is still positive but yes if crude come below $55 level then it will give us bearish crossover and it will be a recent development.
Currently pair is trading and sustaining below minor n major moving average lines. Well intermediate term trend is down so in a downtrend market sell on bounce will be a profitable strategy. Investors and traders are advised to short the crude oil at current level $56.51 and further add short positions till $60 for the target of $53 and $50 with the tight stop loss of $62. The $60 level is immediate resistance level followed by $62 whereas $53 level is strong key support level followed by $50 level.