Yesterday’s undisputed bearish bar leaves almost no chances to oil. We expect further decline to 37.87 and 36.84. We can’t rule out an intermediate upward correction to the middle Bollinger band (39.69-40.10) that would allow traders to have good sell entry points.
Locally a small bearish flag is being formed (decline extension pattern). Longs are out of the question, though oil is quite capable of testing 39.69-40.10. But extension of decline may take place at any moment.
On the hourly chart we observe growing trending activity of ADX indicator. therefore a key resistance zone today will be the round level 39.00. Upward breakout will let the asset recover to 39.69 (dark arrow) and downward bounce will trigger sell-offs in direction 37.87 and 36.84 (red arrow).
Main scenario: Growth to 39.69-40.10, then steep downward reversal and decline in direction 37.87 and 36.84 (in medium term).
Alternative scenario: In case of inability to go above 39.03 we expect decline of the quotes from current levels in direction 37.87 and 36.84.
Shorts from 39.03 and 39.69-40.10 in direction 37.87 and 36.84.