Crude oil futures are currently priced at $66.51, recovering from a low of $65.29, representing a rally of 1.87% from that low. The market has declined by 19.25% over the last 33 trading days, indicating a bearish trend, though recent price action may suggest a temporary bounce.
A contrarian short trade is proposed at resistance levels between $66.61 and $66.88, with profit-taking targets set at $66.64, $66.40, and lower levels down to $65.23. If prices exceed $67.08, potential bullish targets include $67.49 and $69.57.
Key Decision Zones
This analysis outlines significant decision zones for traders, focusing on managing risk and adapting strategies based on market conditions.
Traders have observed a pronounced drop over the past several weeks, with prices falling by nearly a fifth in just over a month. However, the recent upswing suggests that some buyers are stepping in, attempting to push the market higher, at least for now. Whether this momentum can sustain itself remains uncertain, but the outlined resistance levels act as a reference point for those assessing short opportunities.
The suggested trade setup identifies key price zones where sellers may attempt to regain control, with predefined exit points should the move unfold as expected. The approach hinges on the belief that recent selling pressure could resume, leading to lower prices once again. While the recent bounce is acknowledged, it has not yet altered the broader trend, which remains downward.
If selling pressure does return, price targets near and below recent lows provide benchmarks for profit-taking. On the other hand, should buyers overcome resistance, levels above $67.08 come into focus as areas where upside movement could accelerate. Identifying these thresholds allows adjustments in execution, helping to maintain a structured approach rather than reacting impulsively.
Risk Management Approach
Risk management plays a central role in this framework. Setting predefined levels for taking profits and cutting losses ensures that trades align with disciplined decision-making rather than emotions. The presence of competing forces in the market—some aiming to extend declines while others attempt to push back—highlights the necessity of adapting as conditions shift.
Recognising the broader downtrend while acknowledging pockets of short-term strength allows for a balanced perspective. Markets do not move in straight lines, and retracements can present opportunities rather than invalidations of a prevailing trend. Whether prices continue lower or manage to break resistance, the outlined levels act as key decision points. Keeping a watchful eye on these thresholds will aid in refining trade execution and staying aligned with the ongoing market structure.
