WTI (OIL)Texas oil prices are rising (as well as North Sea Brent). Considering the current global risks, the possibility of oil price increase is still standing. (This is a personal opinion)
Wtioil
WTI OIL: Bearish more likely long term.WTI Oil is neutral on the 1W technical outlook (RSI = 51.426, MACD = -0.040, ADX = 21.884) as it is about to close the third straight week trading sideways on the 1W MA50. On this long term chart, we can clearly see that the price hasn't crossed over the R1 level (79.75) since November 13 2023. As long as it keeps closing the 1W candle under it, we are bearish aiming at the 1W MA200 (TP = 73.50), which has been the ultimate Support in tha past few years, closing all 1W candles above it (see the circles). If on the other hand the 1W candle closes over the R1 level, expect a 83.50 test of the Symmetrical Resistance and 1W MA100, which is a Resistance level only crossed once since December 2022.
The 1W RSI trend looks like October 2022 (over the RSI's MA), which was a pattern that was followed by a strong decline. Consequently, we will sell one more time if the 1W candle closes under the 1W MA200 and target near the S1 Zone (TP = 65.00).
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A Renko Trading Strategy - A Look at a ChartThis is a current view of CL and some details on the consolidation that is showing up on the 50 and 25 tick charts. February resistance levels are getting tested again. The 10-tick short-term chart has shown some strength but now showing divergence as price hits the larger blocks resistance levels.
10-tick chart
25-tick chart
50-tick chart
A Renko Trading Strategy - Part 7Part 7: Some Examples of Analysis with Indicators
First, let’s look at some of the key indicators that are included in the charts. Regardless of the brick size (10,25, or 50), all charts will have the same configuration.
DEMA (12-period and 20-period) : These moving averages are designed to react more quickly to price changes than a traditional simple moving average (SMA). The 12-period DEMA is black, and the 20-period DEMA is red. We would look for the 12-period DEMA to cross above the 20-period as a potential bullish signal and below as a bearish signal. As you examine the charts going forward, pay close attention to these two when comparing them to the dynamics of the brick patterns.
SMA (20-period) with Blue Dots : This moving average is plotted with blue dots and provides a visual indication of the longer-term trend. It's smoother and slower to react to price changes compared to the DEMA.
WMA (9-period) on the 20-period SMA (Purple Line) : The WMA is used to confirm trends and reversals. When the WMA is above the SMA, it may indicate an uptrend, and vice versa for a downtrend.
In terms of support and resistance, Renko bricks make it easier to spot these levels as they smooth out minor price fluctuations. Support and resistance would be identified by areas where the price has repeatedly reversed direction.
When comparing the 12 and 20-period DEMA to the Renko bricks, look for areas where the DEMAs act as dynamic support or resistance to the price action indicated by the bricks. Similarly, the 20-period SMA and the 9-period WMA would be assessed for their interaction with the Renko bricks.
For breakout patterns, we would look for a consolidation of Renko bricks, indicated by a tight clustering of bricks without clear direction, followed by a breakout above or below this consolidation with a corresponding move in the moving averages.
Let’s identify any notable patterns or signals on the chart. We will look for:
Crossovers between the DEMAs
The relationship between the DEMAs and the Renko bricks
Potential support and resistance levels
Any consolidation patterns that might indicate breakout points
The Average Directional Index (ADX) is used to determine the strength of a trend. The value of 35 that is used is higher than the standard 20 or 25, which implies the reduced noise in Renko charts.
Here’s how you might interpret the ADX in conjunction with the DI lines:
Consolidation : If the ADX is dropping and has crossed below the 35 level, it may indicate that the trend strength is weakening, suggesting a period of consolidation or range-bound market.
ADX Below DI Lines : When the ADX drops below both the +DI (positive directional indicator) and -DI (negative directional indicator), it further suggests that neither buyers nor sellers are in control, reinforcing the consolidation signal.
Watching for a Trend Change : If after dropping, the ADX starts to turn upward while below the DI lines, it could be an early sign that a new trend is starting to form. The direction of the trend would be indicated by which DI line the ADX crosses. If it crosses the +DI, it may signal the start of an uptrend; if it crosses the -DI, a downtrend might be beginning.
To apply this to your Renko chart, you would look for periods where the ADX dips below 35 and pay attention to its direction relative to the DI lines. You'd also consider the brick color change on the Renko chart for confirmation of trend direction if the ADX starts to rise after the dip.
Keep in mind that technical indicators should not be used in isolation; they are more effective when used in conjunction with other analysis tools and techniques. Renko charts themselves filter out smaller price movements, so the ADX on a Renko chart might not react the same way as it would on a traditional candlestick chart.
Here's some ideas on how to analyze and correlate the given indicators to price action:
Renko Bricks : Renko charts focus on price changes that meet a minimum amount and filter out minor price movements, thus highlighting the trend over time. A 50-tick Renko chart will only print a new brick when the price moves by 50 ticks, thereby smoothing out minor fluctuations and making trends easier to spot. The 1-hour timeframe means that each brick represents an hour's worth of price movement.
Linear Regression Channel (1st and 2nd degree) : This tool is used to identify potential support and resistance levels and the overall trend direction. The 1st degree (linear) regression trendlines show the mean price movement, while the 2nd degree could show a parabolic trend which accounts for acceleration in price movement. The price often oscillates around the mean trendline, and deviations can be used to identify overbought or oversold conditions.
Double Exponential Moving Average (DEMA) 12 and 20 : The DEMA is a faster-moving average that reduces lag time compared to traditional moving averages. In your setup, the DEMA 12 would be more reactive to price changes, potentially serving as a short-term trend indicator, while the DEMA 20 could be used to confirm medium-term trends.
Simple Moving Average (SMA) 20 with 9 period Weighted Moving Average (WMA) : The SMA 20 is a common indicator for medium-term trend direction. When combined with the 9-period WMA, which gives more weight to recent prices, you could use crossovers between the two as potential buy/sell signals.
Stochastic Oscillators (5,3,3 and 50,3,3) : Stochastic oscillators compare the closing price of a commodity to its price range over a certain period. The 5,3,3 stochastic is a fast indicator that can signal short-term overbought or oversold conditions. The 50,3,3 stochastic, being much slower, could be used to assess the longer-term momentum of the market.
Average Directional Index (ADX) with the Directional Movement Index (DMI) : The ADX is used to measure the strength of a trend, whether up or down. The DMI includes both the Positive Directional Indicator (+DI) and Negative Directional Indicator (-DI), which help determine the trend direction. A rising ADX indicates a strong trend, while a falling ADX suggests a weakening trend.
When analyzing the chart, consider the following correlations and insights:
Renko and Regression Channel : Look for periods when the Renko bricks consistently stay on one side of the mean regression line. This could indicate a strong trend. If the price breaks through the regression channel, it might signal a potential reversal or a breakout.
DEMA, SMA, and WMA : Watch for crossovers between these moving averages. A crossover of the DEMA 12 above the SMA 20 and WMA might indicate a bullish short-term momentum, while a crossover below could signal bearish momentum.
Stochastic Oscillators : Look for divergence between the price and the stochastic oscillators. If the price makes new highs/lows but the stochastic does not confirm (known as a divergence), it could indicate a weakening trend.
ADX and DMI : If the ADX is rising and the +DI is above the -DI, the uptrend is strong; if the -DI is above the +DI, the downtrend is strong. If the ADX is falling, the trend is considered weak or the market may be ranging.
For trade setups, you might consider the following:
Long Entry : A new Renko brick in the direction of the trend, a bullish crossover in moving averages, the stochastic coming out of oversold territory, and a rising ADX with +DI above -DI.
Short Entry : A new Renko brick opposite the trend direction, a bearish crossover in moving averages, the stochastic coming out of overbought territory, and a rising ADX with -DI above +DI.
It's crucial to back test these indicators and their correlations with historical price data to validate their predictive power. Additionally, always manage risk appropriately, as indicators are not foolproof and should be used in conjunction with other forms of analysis and sound trading principles.
Part 8: Working Through Some Examples
to-follow
A Renko Trading Strategy - Part 6Part 6: How to Incorporate a Stop/Loss Strategy
Incorporating stop-loss strategies into trading using Renko charts and options involves careful consideration of market dynamics, the specific characteristics of options trading, and the unique aspects of Renko charts. Here are some approaches tailored to this trading strategy:
1. Setting Stop Losses Based on Renko Chart Reversal
Renko Brick Reversals : Since Renko charts are designed to filter out minor price movements, a reversal (change in brick color) can be a significant indicator. For options trading, consider setting a stop-loss order if there's a reversal that contradicts your position. For instance, if trading calls based on an uptrend indicated by Renko charts, a stop-loss could be triggered by the appearance of a certain number (e.g., two or three) of consecutive red bricks, signaling a potential downtrend.
Percentage of Option Value : Determine a percentage loss of the option's value that you're willing to tolerate (e.g., 30-50% of the premium paid). This approach requires monitoring the option's value relative to market movements and Renko chart signals.
2. Volatility-Based Stop Losses
Average True Range (ATR) Adjustments : Although traditional Renko charts do not incorporate time or volume, you can use an additional indicator like the Average True Range (ATR) of the underlying futures contract to set volatility-adjusted stop losses. This method involves setting a stop loss at a point where the option's underlying asset moves against your position by an amount that is significant based on recent volatility, indicating the trend might not be as strong as anticipated.
3. Time-Based Exits
Option Time Decay : For options, time decay (theta) is an important consideration. You might set a time-based stop-loss strategy where positions are evaluated for potential exit if there hasn't been favorable movement within a certain timeframe, considering the decay's impact on your option's value, especially as it approaches expiration.
4. Technical and Fundamental Stop Losses
Renko Chart Patterns : If your Renko charts show pattern breakouts or breakdowns (e.g., failure of a breakout pattern you traded on), use these as a basis for stop-loss orders.
Fundamental News: For commodities like crude oil, fundamental news (e.g., geopolitical events, supply changes) can dramatically impact prices. If such events occur and are likely to adversely affect your position, consider them as triggers for your stop-loss strategy.
5. Dynamic Stop Losses
Adjust According to Market Conditions: As market conditions change, regularly review and adjust your stop-loss levels. This dynamic approach ensures that your strategy remains aligned with the current market environment and Renko chart developments.
6. Mental Stop Losses
Disciplined Execution : While physical stop-loss orders placed with a broker are automatic, mental stop losses rely on the trader's discipline to execute a trade when certain conditions are met. This approach allows for flexibility in response to market conditions but requires strict adherence to predetermined exit criteria to be effective.
Conclusion
Creating stop-loss strategies for options trading based on Renko charts involves a blend of technical analysis, understanding of options' characteristics, and disciplined risk management. By combining Renko chart reversals, volatility adjustments, time-based considerations, and both technical and fundamental factors, traders can develop a comprehensive stop-loss strategy that protects against undue losses while allowing room for the natural ebb and flow of the markets. Regular review and adjustment of these strategies in response to market changes are crucial for maintaining their effectiveness.
Part 7: Some Examples of Analysis
to-follow
WTI OIL Is this a rejection?Almost 3 weeks ago (February 07, see chart below), we gave a strong buy signal on WTI Oil (USOIL), right at the bottom (Higher Lows trend-line) of the 2-month Channel Up:
The price is approaching the 81.50 target right at the top (Higher Highs trend-line) of the Channel Up. Since however we see a strong Resistance Zone that has been holding since the previous Higher High of the pattern, there is a very high probability for a pull-back, until it breaks. In fact, this Resistance Zone goes back to the November 14 2023 High (Resistance 1), with numerous rejections since.
As a result, we will only buy again after a 1D candle closes above the Resistance Zone, in which case we will pursue the 81.50 Target. Until then, we regard the recent rejection as a sell signal and we target the 1D MA50 (blue trend-line) and bottom of the Channel Up at 75.00.
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A Renko Trading Strategy - Part 3Part 3: Patterns in Renko Charts
Renko charts, like other charting methods, have identifiable patterns that traders look for as indicators of potential market movements. These patterns are appreciated for their simplicity and effectiveness in highlighting trends and reversals without the noise of minor price movements. Here are some common patterns observed in Renko charts, applicable across various markets:
1. Trend Patterns
Uptrend/Downtrend: Consecutive bricks of the same color indicate a trend. An uptrend is shown by a series of green (or white) bricks, while a downtrend is depicted by red (or black) bricks. The more consecutive bricks, the stronger the trend.
2. Reversal Patterns
Double Top and Double Bottom: These patterns occur when the price reaches a certain level twice but fails to break through. In Renko charts, a double top is indicated by the bricks failing to move higher after reaching a high point twice, suggesting a potential reversal from an uptrend to a downtrend. Similarly, a double bottom indicates a potential reversal from a downtrend to an uptrend.
Head and Shoulders (and Inverse): This pattern is harder to spot in Renko charts due to their simplified nature but can still be identified. A head and shoulders pattern indicates a reversal from an uptrend to a downtrend, while an inverse head and shoulders suggests a reversal from a downtrend to an uptrend.
3. Consolidation Patterns
Rectangles: These occur when bricks alternate colors within a range, indicating market consolidation or a period of indecision. A breakout from this pattern can indicate the direction of the next significant move.
4. Breakout Patterns
Support and Resistance Breakouts: Renko charts clearly show support (a level where price consistently finds a floor) and resistance (a ceiling where price tends to top out). A breakout occurs when bricks pass through these levels, potentially indicating the start of a new trend.
Strategy Implications
Patterns in Renko charts can be used to devise trading strategies:
Entry Points: Patterns like breakouts from consolidation ranges or reversals can provide clear entry points.
Exit Points: Recognizing the end of a trend pattern or the completion of a reversal pattern can serve as a signal to exit a position to maximize gains or minimize losses.
Stop-Loss Placement: Patterns can help identify significant levels for placing stop-loss orders, such as below a recent bottom in an uptrend or above a recent top in a downtrend.
Advantages and Limitations
The advantage of using Renko charts and identifying these patterns lies in the chart's ability to filter out minor price movements, making it easier to spot meaningful trends and reversals. However, because time and volume are not considered, Renko charts may not always reflect the full picture of market dynamics. Traders often use them in conjunction with other analysis tools to make more informed decisions.
These patterns, while straightforward in theory, require practice to identify effectively and use within a comprehensive trading strategy.
Part 4: Incorporating Patterns with Strategy
to-follow
WTI crude looks set to bounceMomentum has clearly been in favour of bears over the past week for WTI traders, but given it has fallen over 10% from the January high it could be argued the move is oversold (at least over the near term).
A doji formed on Monday to show bears are losing their grip, and the fact it is forming a base above the 2023 open price and $72 handle adds to the case for a technical bounce. Moreover, bears entered around the January highs but volumes declined as prices fell to suggest the move is running out of steam, and RSI (2) was oversold on Friday.
The bias is for a bounce towards the weekly and monthly pivot points around 74.50 - 74.80 whilst prices remain above Monday's low.
WTI OIL on critical crossroads long-term. Rejection or breakout?WTI Oil (USOIL) is being rejected once more on the 1D MA100 (red trend-line). Even though we are constructing this analysis on the 1W time-frame, in order to utilize the long-term dynamics and stress the importance of the 1W MA200 (orange trend-line) as the long-term Support for exactly 3 years (since the weekly break-out of February 01 2021), the key that makes all the difference on the medium-term is the 1D MA100.
The reason is that with the exception of the April 03 2023 and July 10 2023 1W candles, all other tests on the 1D MA100 were emphatically rejected, closing the weekly below it and kick-started multi-week downtrends.
As a result, as long as WTI is closing below the 1D MA100, we are bearish on the short-term, targeting the 1W MA200 again at 73.00. Those who want to take more risk can extend selling to the top of the 3-year Higher Lows Zone (green circles) at 69.50, even though that would be the long-term buy entry with the lowest risk.
If the price closes a candle above the 1D MA100, we will buy the break-out and target the bottom of the (red) Symmetrical Resistance Zone at 82.50, which is marginally below the 0.618 Fibonacci level of the (blue) consolidation pattern. Similarly, if 1W closes a candle above the 1W MA100 (green trend-line), which has only broken and closed above once since November 2022, we will buy that (2nd) break-out and target the bottom of the upper (red) Symmetrical Resistance Zone at 92.50 but with moving the SL constantly higher.
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WTI stalls around resistanceThe core bias remains for a move up to $77, but as price action during the current rally on the 1-hour chart is choppy and has stalled near resistance, we're looking for a dip lower to around $73.
Also note that the weekly and monthly pivot points are hovering above the 10/20-day EMAs, which adds conviction that an interim top may be about to form.
WTI OIL Bullish reversal very likely here.WTI Oil (USOIL) gave us one of the best bullish break-out signals two weeks ago (see chart below):
Since almost touching the 79.75 Resistance, the price pulled back significantly and hit (even marginally breached but never closed) the bottom of the 2-month Channel Up. With the 4H RSI making a Bullish Cross, which was the absolute Buy Signal on the previous two Higher Lows of the Channel Up (January 03 2024 and December 13 2023), we see the start of the new Bullish Leg very likely here.
A break above the 4H MA50 (blue trend-line) should complete the buy signal. As long as that's the case, we will be bullish targeting a +14.41% rise at $81.50 (such as the one that peaked on the January 28 2024 Higher High). If the recent Low breaks, it would mean that the price will be going for a bearish extension such as December 2023 (yellow pattern). In that case we will take a quick sell and target Support 1 at $69.30.
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Hopes for higher oil price are getting shatteredThe hopes for higher oil prices were shattered last week with the announcement of a potential Hamas-Israel ceasefire deal, which led to a quick selloff in the oil market. Following the invalidation of a bullish breakout above $76.14, the price of oil kept sliding lower, finally hitting a low of $71.43 yesterday. Currently, the WTI crude oil trades close to $72.80 per barrel, and we pay attention to RSI, MACD, and Stochastic on the daily chart. All of these indicators began to reverse to the downside after the news hit the market, with RSI and Stochastic building bearish structures and MACD attempting to retrace back below the midpoint. If the MACD succeeds, it will bolster a bearish case in the short term. The same will apply to RSI and Stochastic continuing to develop bearish structures. However, as the ADX remains relatively low on the daily time frame, it is suggestive that there is a lack of any trend whatsoever. With this assessment, it is likely that WTI oil will continue to trade within the range between $68 and $75 in the foreseeable future.
Illustration 1.01
The image above portrays the daily chart of the USOIL’s MACD. A breakout below the midpoint will bolster a bearish case in the short term and elevate the odds of a breakdown below $70 per barrel.
Technical analysis
Daily time frame = Bearish
Weekly time frame = Slightly 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 or any other entity. Your own due diligence is highly advised before entering a trade.
Crude oil could rally from $72Price action has been very choppy on the daily crude oil chart, but if we place a line chart over the top is shows prices are trying to break out of a small triangle / pennant. Whilst these are usually expected to be continuation pattern, they can also make decent reversal pattern. And this case, we've see prices hold above $70 on a closing basis, and the lower candle wicks made a series of higher lows. Momentum is now turning higher.
Bulls could seek dips down to $72 (yesterday's low) or a break of its high, with an upside target around $78, near the 200-day MA and 100-day EMA.
The Red Sea tensions - all you need to knowThe West Texas Intermediate crude oil has trended mostly sideways for over a month, moving between $68 and $75 per barrel. Yet, while the situation in the Middle East and the Red Sea continues to deteriorate, the oil market keeps growing increasingly ignorant of the dangers of a broader war in the region that could further disrupt the transit of goods and oil through (other) important shipping chokepoints and impact the oil supply (remember, the Middle East region accounts for about one-third of global oil supply).
To put into perspective how bad the situation in the Red Sea has become (following the start of the Israel-Hamas War), here are a few numbers: the number of cargo ships and oil tankers transiting through the Bab el-Mandev Strait fell by approximately 50%, and the volume of the cargo (measured in metric tons) dropped by about 67% between 7th October 2023 and last Friday (with most of the decline starting in mid-December 2023 after major shipping like companies halted transit through the Red Sea). In addition to that, since the start of the year (until last Friday), the United Kingdom Maritime Trade Operation reported thirty-five instances of either attack, hijacking, incident, or suspicious approach in the area.
Furthermore, about a week and a half ago, the United States and the United Kingdom finally decided to take more aggressive steps against Houthi’s harassment, launching airstrikes on their positions in Yemen. In response to that, the rebels vowed to continue fighting the United States and Israel (and their allies), executing multiple new attacks on commercial and military vessels in the regional waters (the terrorist group also announced a safe passage for Russian and Chinese ships). In essence, Houthi’s attacks against the United States Navy equal a declaration of war, something the United States is trying to deny as it attempts to avoid an all-out war with Houthis and other proxies of Iran (and potentially Iran itself; do not forget this is a highly political question for the United States as it would mean higher prices of oil and a likely return of rising inflation).
Nevertheless, with Israel’s administration being opposed to stopping its campaign against Hamas in Gaza, it is improbable there will be any relief from Houthi’s attacks anytime soon. In fact, a lack of diplomatic efforts to end the Israel-Hamas War and to resolve the Red Sea crisis keeps increasing the risk of new parties entering the conflict and letting the war spiral out of control. As this has tremendous implications for the oil market (with the broader war being a highly bullish catalyst for the oil price), monitoring the situation in the Red Sea remains a high priority. However, as this scenario still remains only a speculation, our price target of $65 per barrel remains unaffected (at least for now); in the short term, though, we expect the USOIL to continue oscillating between $68 and $75 (and perhaps even breaking temporarily above this range).
Illustration 1.01
Illustration 1.01 displays the daily chart of the USOIL. Yellow arrows indicate significant events in the Middle East. It can be observed that oil rose only slightly in response to the eruption of the Israel-Hamas War on 7th October 2023, and then quickly reversed the direction. Once Houthi rebels began to ramp up their attacks on commercial and military ships in November 2023, oil ticked higher only a bit and then resumed a decline (it is important to note that Houthis were causing problems in the region already before the war). Then, in mid-December 2023, major shipping companies started to halt the transit of their ships through the region. Since then, the USOIL has trended mostly sideways (despite tensions continuing to rise).
Technical analysis
Daily time frame = Neutral
Weekly time frame = Neutral
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 or any other entity. Your own due diligence is highly advised before entering a trade.
GOLD|Important areas of supply and demandHello friends, I hope you are well.
We have the gold chart in the one-hour time frame.
Yesterday we said that we will wait if the support zone is broken down, the next target is the zone (2005-2008).
Now in this area, with the formation of candlestick patterns, it has moved upwards.
The areas that are important for us are the bottom of the previous broken area (2013) and the next area of the origin of the downward aggressive movement, i.e. the price range (2024-2028) for sell positions.
If we lose the support area (2008-2005), our next target is the support area (1990-1995).
GOLD|Important supply and demand areasCurrently, in the one-hour period, the $2060 area can be a good place for sell positions, of course, be careful not to enter the trade without confirmation.
In the first reaction to this area, it went up from the price of 2017$ to 2040$, it gave us a profit of about 230 pips. In the second reaction, collected all the liquidity at the bottom of the range and moved up 2% from there.And moved up about 450 pips.
Right now we see that it is bullish in reaction to the demand range.In smaller time frames, it is more likely that it will not react to the range ahead, so if it does not confirm, do not enter the trade.
There is a possibility that it will go up to the range of 2080. you can look for a sales position there.
This week, look for scalp positions in smaller time frames, even though gold is very bullish this week.
In the one-hour time frame, we have the supply and demand of these areas, when we reach these areas, we can have buy or sell positions.
SOLANA|Trading positions in a BEARISH trendHi guys, I hope you had a profitable trading week.
We have an overview of Solana in 4 hours time.
In continuation of the previous analysis we had of Solana, which went exactly as we expected, now we want to have an update on it, to know what process it has taken.
The last trend of Solana has come in the form of a descending channel, which has reacted well to the up and down of the channel, and has taken its own downward course.
On the 4H time frame, we have a supply zone that we saw two good breakouts from.
The upcoming demand area is the price (85-86.5), which we should keep in mind when the price reaches this area, we can enter buying positions with confirmation.
If this area breaks, we can witness further fall to the area of 72.26
WTI OIL is a strong long-term buy opportunity.WTI Oil (USOIL) has hit today the 1D MA50 (blue trend-line) for the first time since October 24 2023. Today's analysis is on the 1W time-frame but we have explained the reasoning behind a long-term buy once the 1D MA50 would break, a month ago (December 19, see idea below):
That Buy Zone offers a low risk action ground for longs and as you can see on today's chart, it is also supported by the 1W MA200 (orange trend-line), which hasn't allowed a 1W candle to close below it for almost 3 years (since January 25 2021). At the same time the 3-year Support Zone has had 7 times that was hit and held, with the most recent being on December 11 2023.
As a result, if Oil closes a 1D candle above the 1D MA50, there are high chances of a strong medium-term rally on the 1W scale. So far the 1W MA50 (blue trend-line) is the Resistance. All 3-year Support Zone rallies rose very aggressively and the two most recent hit at least the 82.50 level, which will be our Target.
This is just below the 0.618 Fibonacci retracement level, a line that has been approached 4 times already since November 28 2022. Practically the market has been ranging within a 16-month Rectangle after the 2022 High.
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USOIL is gettick stuck between $68 and $75Geopolitics in the Red Sea
Tensions in the Red Sea continue to rise, with Iran issuing yet another warning to the U.S. and its allies before expanding the war in the rich-oil-producing region. The warning follows the deployment of an Iranian warship in the Red Sea after the withdrawal of the USS Gerald R. Ford supercarrier from the waters earlier this month. In addition to that, it follows an increasing number of attacks from Houthi rebels on commercial and military ships sailing through this popular trade route, which caused major shipping companies to reroute their ships around the Cape of Good Hope, adding additional cost and time to the shipping. To make things worse, in the past few days, there were multiple reports of attacks from Somalian vessels on commercial ships in other parts of the Middle East. Furthermore, there were reports of over 100 attacks on the U.S. forces in Syria and Iraq since mid-October 2023. To sum up these developments, the situation in the region is deteriorating at a fast pace, and the potential eruption of a broader conflict continues to pose a significant threat to falling oil prices.
Technical analysis
Since the start of the year, the USOIL has been mainly trending sideways. The loss of bearish momentum is reflected in a low value of ADX and flattening of RSI, Stochastic, and MACD on the daily chart; the flattening can also be observed on the weekly chart. As a result, we expect the USOIL to keep oscillating between $68 and $75 in the very short term. However, our price target of $65 per barrel stays unchanged.
Illustration 1.01
Illustration 1.01 shows the daily chart of USOIL and simple support/resistance levels derived from peaks and troughs.
Technical analysis
Daily time frame = Neutral
Weekly time frame = Bearish (turning neutral)
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 or any other entity. Your own due diligence is highly advised before entering a trade.
USOIL reacting only slightly to the tensions in the Red SeaIn mid-December 2023, we witnessed major shipping companies announce a halt to transit through the Red Sea. Then, with the launch of Operation Prosperity Guardian, we saw the same companies start reversing their decisions, only to again pause shipping quickly after the resumption (thanks to more attacks from Houthi rebels targeting Maersk ships). As such, the past three weeks in the oil market were marked by turmoil, affecting about 8.2 million barrels per day in transport through the region (and an estimated 12% of the world’s trade). With these tensions increasing, USOIL is reacting positively, and we acknowledge that USOIL may continue to oscillate between $68 and $75 in the short term (before diving lower). However, our price target of $65 per barrel stays in place.
Technical analysis
Daily time frame = Neutral
Weekly time frame = Bearish (turning neutral)
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 or any other entity. Your own due diligence is highly advised before entering a trade.
US OIL : Will the continuation of the war increase the price of Dear friends and colleagues, we are at your service with the world oil chart in the 4-hour time frame. As you can see, oil started to grow after a heavy drop and after breaking its previous ceiling of $72, it was able to reach the resistance range of $76. The dollar reached and is currently traded below this range. Considering the scope of the Middle East war and the escalation of tensions, there is a possibility that oil will reach the range of $100 per barrel.
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Disruption to the oil supply chain averted (at least for now)Following the initiation of Operation Prosperity Guardian in the Red Sea, major shipping companies like Maersk and Hapag-Lloyd began to reverse their recent decisions to halt transit through this waterway. That is positive news for the world as the region is estimated to account for about 12% of global trade, with 340 million metric tons of cargo and 8.2 million barrels of oil passing through daily. Nonetheless, as disruption to the oil supply chain seems to be averted, this news is likely less favorable for the oil price, which is currently trading near $75.50 per barrel. With that said, we have no reason to change our outlook for the next year, and our price target stays at $65 per barrel; however, in the short term, we acknowledge that USOIL may move higher (potentially somewhere in the range between $77 and $78) before reversing. We will update our thoughts with the emergence of new developments.
Illustration 1.01
Illustration 1.01 shows the daily chart of USOIL. The yellow arrow indicates a bullish breakout above the upper bound of the downward-sloping channel, which is quite bullish (unless invalidated).
Technical analysis
Daily time frame = Slightly bullish
Weekly time frame = Bearish (turning neutral)
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 or any other entity. Your own due diligence is highly advised before entering a trade.
