Oil has a high chance of declining this month, and the reason for this is the rising risk of another pandemic wave worldwide. Many countries have already recorded a surge in cases, and some even reinforced quarantine measures.
So, in order to avoid realizing losses in this market, it is best to take up short positions, following the bearish trend in crude.
To be specific, we will make use of technical analysis to determine how we can short crude and get profit from it.
Thus, based on the recent price movement of oil, we will see that an ABC pattern has formed on the daily chart:
The same structure can also be seen on the lower time frames:
Wave "A" of this intraday structure is the wave of sales last Monday. If we apply the Elliott Wave theory, the next target should be the low reached on the same day. This means that we should continue selling crude until the price reaches $ 38.88.
For the second target, we can aim for $ 37, or the 161.8% Fibonacci extension.
Of course, trading in this market is very risky, however, it is also very profitable as long as we use a correct approach.
Best of luck!
