The Expected Oil Reversal
December 24, 2019 (Investorideas.com Newswire) On Friday, we wrote: (...) Crude oil futures moved higher once again during yesterday's session, overcoming the upper border of the rising green trend channel for the third time in a row. While the futures finished the day above this resistance, the bulls didn't manage to hold gained ground in full.
Earlier today, the futures opened with the red gap. This bearish development means invalidation of yesterday's breakout, which doesn't bode well for the bulls.
The daily indicators are still very extended, also supporting the likelihood of upcoming resolution to the downside.
The situation indeed developed in tune with the above, and crude oil futures extended losses after our Alert was posted. Friday's drop took black gold slightly below the upper border of the purple consolidation, which means invalidation of the earlier breakout above it. This is an additional bearish development.
Further deterioration followed earlier today, which suggests that lower prices are probably just around the corner. This is especially the case when we factor in the sell signals generated by the daily indicators.
Should it be the case and the futures extended losses from here, the initial downside target for the sellers will be the Friday's green gap.
Summing up, the bulls ran out of steam on Friday, and a reversal lower followed. The result has been invalidation of the breakout above the purple consolidation. Today's bearish gap at the open supports downswing's continuation, and so do the sell signals of the daily indicators. The short position continues being justified from the risk-reward perspective.
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