Oil Price At Critical Junction

Oil price has broken above an important trend line resistance and above the Daily Kumo (cloud) but it is now pulling back. Was this a fake break out? If the break out was real we should soon see price reverse to the upside and break above 58.80$ for a move above 61-62$…if this was a false break out we should see Oil towards low 50’s.

(Click on image to enlarge)

Oil price is backtesting the Kumo (cloud) at 55.90-55.60$ area. Holding above the cloud is very important for bulls. Pushing above 56.90$ is critical for the short-term trend as this would increase the chances of moving above 59$. On the other hand, a false break out combined with price breaking below the Daily Kumo would be a sign of weakness. A daily close above 58$ would be a sign of strength. At this point, I prefer to be a buyer of OIL as the level that would cancel my bullish view is closer than the level that would cancel my bearish scenario. The risk-reward ratio favors the bullish side.

Time will tell….

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