After a big rally and impulsive move from 26$ Oil has reached and made an important top at 42.55$. Price has broken the bullish short-term channel and Oil price is pulling back downwards. On a bigger picture Oil price has broken above the downward sloping wedge in the weekly chart of the continuation contract.
This is a bullish medium- to long-term reversal signal. Price should now pull back to back test the broken wedge pattern upper boundary near 33-34$. So I expect some more downside pressures in Oil prices before the resumption of the up trend. Stochastic has entered overbought levels and I believe it does not provide a good risk reward being long here.
In the short-term price has given bearish reversal signals after breaking out and below the upward sloping channel and below the Kumo in the 4 hour chart. 39$ is short-term resistance, if broken we could see a bounce towards 40$ but overall I believe we will see a push to much lower levels near 33-34$ before the bigger bullish move resumes.
Concluding, my longer-term view is bullish but will look to open long positions around 32-34$ area. So I’m short-term bearish as long as price is below 42.50$.