Oil Short Term Forecast Follow Up And Update

Hi Traders! Oil short term forecast follow up and update is here. On July 12th I shared this “Oil Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!

My Idea

On the H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 101.813 and the second high that has formed at 102.707 based on the MACD indicator. The price then moved lower and broke below the last low at 99.134 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction has happened. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) holds my short term view remains bearish here and I expect the price to move lower further.

 

 

Oil H1(1 Hour) Chart Current Scenario

Based on the above-mentioned analysis, on the H1 chart, my short term view was bearish here and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the bearish convergence the pullback that I was looking for happened with the price reaching the strong resistance zone, respected it and moved lower from this zone. The price then moved lower further delivering an excellent move to downside until it was blocked by a bullish divergence.
On the M15 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish hidden divergence between the first high that has formed at 102.529 and the second high that has formed at 102.007 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further and provided an excellent move to the downside.

(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)

As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.

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