The crude oil price corrects from the highs as it was rejected in its attempt to consolidate above the $60 level. The market appears to have started a head and shoulders pattern, with the price currently looking for support on the right shoulder. On the move lower, the lower edge of the rising channel comes as the next logical level that might offer additional support.
Crude oil rallied last week on the freezing temperatures in the United States and quicker than expected economic recovery due to ongoing vaccination efforts. This week the focus shifts to the upcoming OPEC+ meeting as Saudi Arabia and Russia have different opinions about adding more supply to the market.
The chart below reveals the strong upside trend seen in the crude oil price lately. Shorting such a trend is risky and represents a contrarian opinion. In fact, the conditions for a bullish trend remain in place, with the market still holding the higher highs and higher lows series. However, courageous bears may want to short during the current consolidation with a stop-loss at the highs. As for the take profit, it makes sense to book half of the profits by the time the price reaches the lower edge of the channel and leave the rest for a 1:2 or 1:3 risk-reward ratio.
