Technical analysis update: WTI oil (7th December 2021)
Updated
Today WTI oil broke above 70 USD and it currently trades around 71.50 USD per barrel. In our previous ideas we stated that ongoing politics between OPEC and the U.S. presented headwinds for the price of oil. We also noted that USOIL reached oversold conditions and its price was very attractive for long position (re)entry (as we remained bullish in long-term). Then we updated the most recent idea on 3rd December 2020 where we said that a bullish breakout above 69.21 USD took place. Today's breakout above the 70 USD price tag is even more bullish; additionally, it suggests that correction most likely ended. We are bullish on oil in the short-term as well as in the long-term. Because of that we would like to set a short-term price target for USOIL to 72.50 USD. Our medium-term price target for USOIL is 75 USD and our long-term price target for oil is 85 USD per barrel.
Technical analysis - daily time frame
Stochastic reversed and it is currently pointing into a bullish direction. RSI broke above 30 points (from oversold zone) which is very bullish. MACD remains in the bearish area, however, it shows first signs of trying to reverse. This view is also supported by its declining histogram. Additionally, ADX peaked which suggests that correction peaked as well. Though, DM+ and DM- continue to show bearish conditions. Overall, technical analysis is less bearish than at the time of our most recent update. Indeed, several indicators point to the end of correction and reversal in trend.
Technical analysis - weekly time frame
RSI seems to reverse its bearish direction back to the upside. We will await confirmation of this move by gain in USOIL for the current week (and next week). MACD remains in the bullish area, however, it still points into bearish direction. It needs to be observed closely in the following weeks.Stochastic remains bearish. DM+ and DM- remain bearish, however, ADX declines which suggests that selling pressure is cooling off. In general, weekly time frame remains bearish. Because of that we remain little bit cautious. However, weekly time frame respons with higher latency than daily time frame.
Support and resistance
Closest psychological support sits at 70 USD while short-term support sits slightly below that at 69.60 USD. Other two support levels are at 69.21 USD and then at 65.11 USD. Major support level appears at 61.76 USD. Closest resistance lies at 74.21 USD, then other resistance levels sit at 75.47 USD and at 76.95 USD. Major resistance level is at 85.39 USD.
Other possible resistance levels:
These resistance levels are derived from the peaks that price made during the correction. They are at 79.20 USD and 84.95 USD.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.
Technical analysis - daily time frame
Stochastic reversed and it is currently pointing into a bullish direction. RSI broke above 30 points (from oversold zone) which is very bullish. MACD remains in the bearish area, however, it shows first signs of trying to reverse. This view is also supported by its declining histogram. Additionally, ADX peaked which suggests that correction peaked as well. Though, DM+ and DM- continue to show bearish conditions. Overall, technical analysis is less bearish than at the time of our most recent update. Indeed, several indicators point to the end of correction and reversal in trend.
Technical analysis - weekly time frame
RSI seems to reverse its bearish direction back to the upside. We will await confirmation of this move by gain in USOIL for the current week (and next week). MACD remains in the bullish area, however, it still points into bearish direction. It needs to be observed closely in the following weeks.Stochastic remains bearish. DM+ and DM- remain bearish, however, ADX declines which suggests that selling pressure is cooling off. In general, weekly time frame remains bearish. Because of that we remain little bit cautious. However, weekly time frame respons with higher latency than daily time frame.
Support and resistance
Closest psychological support sits at 70 USD while short-term support sits slightly below that at 69.60 USD. Other two support levels are at 69.21 USD and then at 65.11 USD. Major support level appears at 61.76 USD. Closest resistance lies at 74.21 USD, then other resistance levels sit at 75.47 USD and at 76.95 USD. Major resistance level is at 85.39 USD.
Other possible resistance levels:
These resistance levels are derived from the peaks that price made during the correction. They are at 79.20 USD and 84.95 USD.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.
Trade closed: target reached
Short-term price target of 72.50 USD has been reached.Trade active
USOIL failed to to move above 74 USD. It currently trades slightly above 70 USD. We think that persistent weakness in the general stock market poses threat to further rise in oil price (in short-term). Because of that we abandon short-term and medium-term price target. Aactually, we think it is very likely that weakness in the stock market will drag lower oil prices. We will watch the FOMC tomorrow and while we will look out for more clues in regards to future monetary policies.
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