In my last blog on crude oil I stated that, "...crude's 100% bullish directional momentum has made me reluctant to sell this market short (even though cycle analysis is suggesting a significant correction by early June).", and also,
" I would still like to see more bearish momentum in crude charts before committing strongly to a short position."
Yesterday a strong bearish signal did appear in crude charts and this now makes directional momentum mixed bullish and bearish. Crude prices do seem to be breaking down, and cycle studies are pointing strongly to a significant correction over the next several weeks that would at least test $97 and could possibly go as low as the $91-$92 area that began the current cycle. For these reasons I am going to establish a short position in crude oil today with a stop loss point between $100- $101 . Prices are close to $100 at the time of this writing so this presents us with a good risk/reward ratio for the trade. I am being very cautious with this trade and I am not putting too much money into it as escalating violence in Ukraine may exacerbate geopolitical instability in this region and push crude prices higher. However, even with today's military clashes prompting an emergency meeting of the United Nations, crude prices are up only slightly (unlike gold and silver which are up significantly), so technic al and cycle analysis may prevail here.