WTI oil - The EU ban on Russian oil risks higher pricesRecently, we stated that USOIL has bottomed out and is due to drift lower during the rest of the year. We continue to maintain this stance. However, over the past few days, there has been an increase in talks about the EU ban on Russian oil. Indeed, several media outlets reported that the EU is about to proceed with this step. Though, it is just a rumor at the moment. But if the EU manages to ban Russian oil, it will force us to abandon bearish bias for USOIL. Actually, in such a case, we think the oil ban would revive the rally and drag prices higher, possibly reaching a new high.
Illustration 1.01
The picture above shows USOIL on the daily time frame. It also shows the resistance at a slope (white line) and the bullish breakout above it (indicated by the yellow arrow). We will look for a potential breakdown in price and invalidation of the bullish breakout.
Technical analysis - daily time frame
RSI and MACD are bearish. However, MACD is trying to break above 0 points into the bullish zone. If it manages to do so, it will bolster the case for USOIL. Stochastic reversed to the upside and points in the bullish direction. DM+ and DM- show bearish conditions in the market. However, ADX contains a low value, indicating no significant trend. Overall, the daily time frame is neutral.
Technical analysis - weekly time frame
RSI started to flatten recently. However, its bearish structure remains intact. MACD is in the bullish zone; however, it began to decline first and then flatten. Stochastic is bearish. DM+ and DM- signal bullish conditions in the market. ADX declines, which suggests that the prior bullish trend of a higher degree is weakening. Overall, the weekly time frame is neutral.
Illustration 1.02
The picture above portrays the weekly RSI of USOIL. The bearish structure can be seen intact.
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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
