I'm looking closely at crude oil trends, and January 7th was truly dramatic. The price started at 56.95 at open, surged to 57.11 before getting knocked back, then plummeted sharply to 55.77, which scared quite a few longs out of the market. It subsequently rallied to touch 57.18, but lost momentum near the close, finally settling at 56.39.
This candlestick has a particularly long lower wick, which essentially shows bulls and bears locked in a fierce struggle. The closing price dropped below the 5-day moving average, with bears gaining the upper hand.
The volume is quite interesting—yesterday traded 352,400 contracts, compared to 264,800 contracts the day before, an increase of 33%. What does this tell us? There's massive disagreement at the 57 mark, with some aggressively selling at highs and others buying at lows. Market sentiment is extremely intense.
**From a trading perspective**
My current view is that the 57 resistance level remains quite strong. If looking to short, you could consider entering in the 56.9 to 57.1 range, with a stop-loss placed above 57.3 (slightly higher than yesterday's high of 57.18 to avoid getting stopped out on false breakouts).
How to set downside targets? First level is 56.3, which is yesterday's close and corresponds to the central level of previous consolidation. If 56.3 breaks, the second target is 55.7, yesterday's low and the upper edge of that key support zone. If further downside breaks through 55.3 to 55.0, be prepared for potential acceleration toward the deeper support band of 52.5 to 53.0.
**But risk management is critical**
If 57.3 is decisively broken and holds above it, short-term resistance would be invalidated and shorts should immediately close. In that scenario, be alert that bounces could reach 58.39 to 58.50 (where the 50-day moving average provides resistance).
Conversely, if price stabilizes with volume expansion in the 55.0 to 55.3 range (volume surges beyond 30% while price starts recovering), you could consider a light long position targeting 57.0 to 57.3, with stop-loss below 54.8.
Honestly, in this situation with opportunities on both sides, the key is waiting for price to give a clear signal first, otherwise you'll get stuck in the middle.
I'm looking closely at crude oil trends, and January 7th was truly dramatic. The price started at 56.95 at open, surged to 57.11 before getting knocked back, then plummeted sharply to 55.77, which scared quite a few longs out of the market. It subsequently rallied to touch 57.18, but lost momentum near the close, finally settling at 56.39.
This candlestick has a particularly long lower wick, which essentially shows bulls and bears locked in a fierce struggle. The closing price dropped below the 5-day moving average, with bears gaining the upper hand.
The volume is quite interesting—yesterday traded 352,400 contracts, compared to 264,800 contracts the day before, an increase of 33%. What does this tell us? There's massive disagreement at the 57 mark, with some aggressively selling at highs and others buying at lows. Market sentiment is extremely intense.
**From a trading perspective**
My current view is that the 57 resistance level remains quite strong. If looking to short, you could consider entering in the 56.9 to 57.1 range, with a stop-loss placed above 57.3 (slightly higher than yesterday's high of 57.18 to avoid getting stopped out on false breakouts).
How to set downside targets? First level is 56.3, which is yesterday's close and corresponds to the central level of previous consolidation. If 56.3 breaks, the second target is 55.7, yesterday's low and the upper edge of that key support zone. If further downside breaks through 55.3 to 55.0, be prepared for potential acceleration toward the deeper support band of 52.5 to 53.0.
**But risk management is critical**
If 57.3 is decisively broken and holds above it, short-term resistance would be invalidated and shorts should immediately close. In that scenario, be alert that bounces could reach 58.39 to 58.50 (where the 50-day moving average provides resistance).
Conversely, if price stabilizes with volume expansion in the 55.0 to 55.3 range (volume surges beyond 30% while price starts recovering), you could consider a light long position targeting 57.0 to 57.3, with stop-loss below 54.8.
Honestly, in this situation with opportunities on both sides, the key is waiting for price to give a clear signal first, otherwise you'll get stuck in the middle.