FxWirePro Short Term Outlook: Add additional shorts on oil rallies

In late April, we called on our readers to go short in WTI targeting $43 per barrel at then current price of $49.6 per barrel. As WTI declined to $43.7 per barrel last week, we have extended our target to $38 per barrel. After declining to $43.7 per barrel last week on Friday, the price jumped back sharply to touch $46.95 per barrel. The French election outcome and the weakness in the dollar might have been instrumental in the bounce.

However, we would like to recommend selling the bounce and add additional short positions with the target of $38 per barrel. We also expect the Brent benchmark to decline below $40 per barrel and the current rally to be a short-lived one.

The biggest threat to the call remains the upcoming OPEC meeting which is on 25th of May. We would remain vigilant heading to the meeting; however, we feel that the price target might get reached even before. If not, we would recommend limiting risks by using a shorter stop loss.

As of now, the resistances for WTI lie around $47.1 and $49.5 per barrel area. WTI is currently trading at $46.7 per barrel.