China's turmoil, SPRs, and further deterioration in outlook
Updated
In our previous update on West Texas Intermediate crude oil, we updated our price target from long-term to medium-term. Additionally, we stated that this price target could soon become short-term, depending on oil market developments. Today, finally, USOIL hit a new yearly low at 73.62$, further confirming our bearish thesis. Accordingly, we continue to maintain our price target at 70$.
Our views are based on a combination of fundamental and technical factors. We expect the global recession to weigh heavily on oil prices in the coming months. In addition to that, we expect the United States to offset any price increases with more releases of Strategic Petroleum Reserves (SPR).
As if it was not enough, turmoil in China also does not support the bullish narrative, putting higher prices at risk. The same applies to OPEC member countries that seek to increase their production despite a slowing economy. Overall, we have no reason to change our bearish outlook.
Illustration 1.01
Illustration 1.01 displays the daily chart of USOIL.
Technical analysis - daily time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02
The illustration shows the daily chart of USOIL, simple support/resistance levels, and two moving averages. At the moment, the price appears too far from these moving averages, likely foreshadowing a correction to the upside (as the price deviated too far from its MAs). Now, these MAs act as significant resistance levels.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Our views are based on a combination of fundamental and technical factors. We expect the global recession to weigh heavily on oil prices in the coming months. In addition to that, we expect the United States to offset any price increases with more releases of Strategic Petroleum Reserves (SPR).
As if it was not enough, turmoil in China also does not support the bullish narrative, putting higher prices at risk. The same applies to OPEC member countries that seek to increase their production despite a slowing economy. Overall, we have no reason to change our bearish outlook.
Illustration 1.01
Illustration 1.01 displays the daily chart of USOIL.
Technical analysis - daily time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02
The illustration shows the daily chart of USOIL, simple support/resistance levels, and two moving averages. At the moment, the price appears too far from these moving averages, likely foreshadowing a correction to the upside (as the price deviated too far from its MAs). Now, these MAs act as significant resistance levels.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active
We upgrade our medium-term price target of 70$ to a short-term price target.
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