Crude Oil Forecast 16/02

The market is in a clear downtrend (LH`s and LL`s - Blue Line), the price has already showed rejection of the most consolidated trend line and after the break of the most immediate uptrend line (green one) one should look for a short position having into account the structure of the market, lets see if the order is triggered (Sell Limit at 29.30)

Comment:

Now after the trade was triggered comes the management of the position and this management depends entirely on the risk tolerance of each person and the price structure, therefore from my point of view there are several scenarios that can be play but first before everything is important to acknowledge the price action and its behavior, therefore here comes a lecture of the price in terms of supply and demand:


The price is in a downtrend which is confirmed by several Lower Lows and Lower Highs (Blue Line) showing the willingness of the sellers to push the price to the down side, notwithstanding in order to maintain this condition the price should keep falling and making LL`s and LH´s, in this order of ideas there are two key areas pointed by the red arrow and the green one (link image below); these areas are important because here the market participants show their willingness to push the price higher or lower.

If the price breaks above the 29.40´s (Red arrow) it is posible two outcomes: one a reversal of the previous down movement or two only a spike in the overall down trend and later a continuation to the south.

In the other hand if the price breaks the green arrow area that would be the behavior that one could be looking for in order to confirm the initial hipothesis of the beginnig (the reason why we went short) the existence of the downtrend

screencast.com/t/GFfx3ulXq5

Comment:

After the last update the price was able to found resistance above the 29.30, notwithstanding the sellers were unable to break down the nearest support around 28.75, market condition that create a Trading range (Link Image below) therefore in this order of ideas the exit of the trade should be place above the 29.30 (the resistance of the Trading Range)

screencast.com/t/ZV5LHoz7