Oil has just encountered a solid dip on the back of increased oil drilling activity in the United States, along with an ongoing sentiment of ample supplies from OPEC and non-OPEC countries. 'Black crack' continues to trade lower, fueled by the recent news from OPEC who indicated that it may adjust its production caps in order to include Libya and Nigeria. These two countries' oil production has increased rapidly over the last couple of months.
Crude Oil – 61.8% Fibonacci Retracement
Just like with forex trading, technical levels, candlestick formations, and technical indicators can be really handy when trading crude oil. Here are a few things to keep in mind if you're trading or watching crude oil at the moment:
– On the 4-hour timeframe, the oil price has completed a 61.8% Fibonacci retracement at $44.
– The oil price is holding below the 50-period EMA, which enforces our bearish bias. To learn more about using moving averages, read this article: Moving Averages – Forex Trading Strategy.
– The "Three Black Crows" candlestick formation points to a further decline in the oil price.
Forex Trade Signal Idea
About two hours ago, the oil price reached its lowest level for the day, so far. I am waiting for the market to pull back a bit up to $44.35 before adding any additional short positions.