So far Speculative positions are driving Crude Oil Price action, especially preceding the breakout failure around 51.50. From the beginning of 2017, Bulls tried to pass through the resistance level 51.50. Several data from media outlets, news portals kept blubbering about large chunks of bullish positioning by big funds. On the other hand, optimistic production cuts from OPEC supported the over all positive tone of Fundamentals. But Prices behaved completely different from fundamentals, and barely reacted to it. Market is struck in a tight range between 51 -54.(Based on international Crude Oil prices)
Technically it’s a breakout on weekly chart (Look at my markings on the price chart). Since Prices couldn’t stay clearly above 51.50, bulls liquidated their positions – this in turn resulted in massive selloff from 52.00 t0 48.00.(Breakout failure) Buyers trapped within that tight range, exited the position in masses. The fall we see on the charts now is a result of speculative position clearing. I would like to wait for a pullback and take trades based on it. If pullback fails, it’s better to go long, if pullback sustains, good to go short. Watch the Price action and trade accordingly. Be flexible with your risk management.
