Shorting the Retreat in Crude Oil
Crude Oil is reversing down after failing at the 20 SMA on the h4 chart
Skerdian Meta•Tuesday, August 10, 2021•1 min read
Crude Oil had a great run for more than a year, until the first week of July, as OPEC+ had some massive production quotas in place. The global economy has been rebounding strongly this year, especially in Q2, but, since topping at $77 back then, oil has been having a difficult time holding onto gains. Instead, it has been making lower highs since then.
We saw a decent retreat by the middle of July, which took the price more than 11 cents down, to lows of $65, after OPEC+ came to an agreement to increase oil production in August. That decline ended at the 100 SMA on the daily chart, which held as support, and crude bounced off that moving average.
US Crude Oil Live Chart
WTI
But with the Delta coronavirus variant concerns right now and the situation in China, which is seeing increasing numbers, gains in crude oil might be limited as it climbs closer to $70, should things remain as they are. However, we decided to sell oil lower, below $68, on this bounce off the previous low, since it was finding it difficult to push above the 20 SMA (gray) on the H4 chart.
The pullback higher was running out of steam, despite not reaching overbought levels, so we decided to open a sell position in US WTI crude, just below the 20 SMA on the H4 chart. The German and Eurozone ZEW economic sentiment has dived to the lowest levels since the massive lockdowns in March/April last year, which should weigh on crude oil as well. We have placed the take profit target around $1, above the support, while the stop loss is above $70, so let’s see if the sellers still remain in charge for now, at least until we get our profit.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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