Just like the precious metals market, black gold ended the previous week with a sizable upswing. The rally continued in the early Monday trading, as crude oil moved decisively above its previous April highs.
The breakout above the April highs is a sign of strength, but it has not been confirmed so far. Crude oil did close the previous week above the highest daily close of April, but it was just a little higher. The move is definitely bigger based on today’s pre-market upswing, but the breakout is still far from being confirmed in terms of time.
The next upside target is the 50% Fibonacci retracement level, which coincides with the mid-March top. However, if the breakout above April highs is invalidated, crude oil could decline all the way down to the $20 level or so, before pausing or bottoming.
Without enough bullish or bearish signs, we don’t think that entering an oil trading position is justified at this time due to the lack of either bullish or bearish confirmations. We expect to see more clues shortly.
Summing up, we might get an opportunity to enter long or short positions very soon, and increase our 2020 profits, but such opportunity remains absent at this time.