Oil Technical Analysis & Why We Took a Short Last NightLast night at our Telegram channel, we issued a short trade idea on crude oil futures. Here's a breakdown of several (but not all) reasons behind our decision. Join our free Telegram channel for more day, swing, and long-term trade ideas: https://t.me/investingLiveStocks. New traders are also welcome!Technical Analysis OverviewAt the time of writing this analysis, Light Crude Oil Futures (CL1!) trade around $69.84, slightly below yesterday's close. Here are several key technical points behind our short trade:1. Retest of a Bear FlagWe're observing the 4-hour chart on TradingView, noting a previously broken upward channel—a classic bear flag pattern. The price retested this channel twice after breaking downward, making it a significant resistance area.2. Volume Profile ResistanceBetween the recent major swing from about $64.50 to $78.40, the Volume Profile indicates clear areas of interest:Value Area High (VAH)Point of Control (POC)Value Area Low (VAL)Price is currently testing the VAL, another critical resistance area.3. Psychological $70 Round NumberThe $70 level is a significant psychological round-number resistance. Traders commonly use such round numbers to take partial profits, adding potential selling pressure.4. Historical Retracement PatternsSince late June, every time crude oil surged by about 4%–5%, notable retracements followed. The recent upward move has been approximately 9%, suggesting a retracement is highly probable.5. Sentiment-Driven Surge (Meta & Microsoft Earnings)NASDAQ and S&P futures rallied strongly due to robust earnings from Microsoft and Meta, indirectly inflating crude oil prices via broader bullish market sentiment. Such sentiment-driven moves often reverse when the excitement fades.Our Trade Management ApproachInitially, we set a conservative stop-loss and take-profit of 1.5%. After entry at $70.34, we quickly tightened our defense, adjusting both to 1%. When TP1 at $69.64 hits, we’ll take half the position off, moving the stop-loss to $71.04, effectively securing a risk-free trade. We’ll let the remaining half swing short for potentially bigger profits in upcoming sessions.This tactic demonstrates rapid risk management applicable to traders of all experience levels and across various timeframes.About investingLiveinvestingLive, formerly ForexLive.com, provides real-time market news and analysis across forex, stocks, commodities, and global markets. Our global team delivers clear, timely insights to help professionals stay ahead of market moves around the clock.Join our community for free trade ideas, market education, and real-time updates: https://t.me/investingLiveStocks. Trade at your own risk.Oil Fundamental Analysis Today: China's Got the Oil Market SpookedSo, this morning, the big news sending ripples through the trading desks is all about China's economy hitting a speed bump. Their official manufacturing gauge, the PMI, actually shrunk in July, hitting 49.3. Think of it like a factory indicator; anything below 50 means things are slowing down, not growing.Now, why does this matter for oil? Simple: China is the world's biggest oil guzzler. When their factories aren't humming, their construction sites aren't bustling, and people aren't spending as much, they just don't need as much crude. Even though their overall economic growth (GDP) for Q2 came in a bit better than expected, that number kinda hides the real story of weak spending and ongoing property market headaches. Plus, they're seriously pushing electric cars and high-speed trains, which is a long-term drain on oil demand.So, when China sneezes, the oil market often catches a cold. We're already seeing crude prices erase some of their earlier gains today because of this news. It's putting a big question mark over global oil demand, which usually counts on China to do the heavy lifting.More Oil Coming, But Watch for SurprisesOn the flip side, we've got more oil flowing into the market. Countries outside of the OPEC+ group (like the US) are pumping more, and even OPEC+ itself has been slowly ramping up production. They've been pretty flexible, though, so if China's slowdown really drags on, don't be surprised if they hit the brakes on those increases to try and keep prices stable. They're meeting again in early August, so that's definitely one to watch.The US, in particular, is expected to see its oil output ease a bit over the next year and a half, partly because lower prices might make drilling less attractive. All in all, the big picture suggests there's likely to be more oil supplied than demanded, which tends to push prices down.The Wild Cards: Geopolitics & Your GutOf course, it's never just about supply and demand. The world's a messy place, and geopolitics can throw a massive wrench into the oil market at any time. Think Middle East tensions, ongoing issues in Ukraine, or even new trade disputes. Any major conflict or supply disruption can send oil prices soaring, even if the underlying demand looks weak. We saw a glimpse of this in June when tensions in the Middle East caused a temporary spike.What This Means for Your TradingRight now, the scales are tipping bearish for oil, mainly because of China's economic struggles. We're looking at a market where there might be too much oil for the demand that's out there. This means traders might be looking for opportunities to go short, or at least be very cautious about long positions.But remember, this market moves fast. Keep an eye on:More data from China: Is this a blip or a trend?OPEC+ decisions: Will they pull back on production increases?Any fresh geopolitical headlines: These can turn the market on a dime.Okay, traders and investors at investingLive.com, and we hope that most of you already know that we changed our name from ForexLive at ForexLive.com (to bring you more of the good stuff we work hard at bringing), remember that all of the above is just our opinions and not financial advice. Always do your own reseach and always stay tuned to other original ideas and persepctives at investingLive. See you soon on news and information that you need to know, and can understand how to trade. This article was written by Itai Levitan at investinglive.com.