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Earlier this month crude oil tested a confluence of resistance at 63.80/90.
It’s the intersection of ascending channel resistance and a horizontal level that served as support during the second half of last year.
The 63.80 level is also the 61.8% Fibonacci retracement of the late 2018 selloff that took oil from 76.70 to 42.40 in three months.
You can see where buyers broke through this area on April 8th.
However, I wasn’t buying it (quite literally).
As is often the case with an upside break of an ascending level, this was a false break. At least that’s how things stand today.
I posted something similar in the member’s area on April 11th.
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That candle on the 11th didn’t actually close below 63.80 though.
In fact, WTI is still holding above that area on a daily closing basis or is at least attempting to do so.
So while buyers appear to be losing a bit of steam in this 63.80/90 region, there isn’t a clear selling opportunity just yet.
That could change this week, though, depending on how the market reacts to 63.80/90 going forward.
Keep in mind that any oil shorts are counter-trend trades.
If you sell this market right now, the momentum since last December is not on your side.
As such, it makes sense to either use a starter position or wait for a clear sell signal on the daily time frame.
You will also want to keep a close eye on the confluence of support at 60.30.
That will be a key test for oil bears and bulls alike. It will also serve as a hinge for the uptrend that began last December.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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