|Technical Outlook for WTI Crude Oil (USO)
Following last week’s sell-off, the weekly of WTI Crude Oil (NYSEArca:OUS) (see below) is left with a “Gravestone Doji” candlestick pattern.
This is formed when the opening and closing prices are roughly the same and at the low of the candle. There is also a long upper shadow, or a wick, suggesting that the previous buying pressure was countered by selling.
In short, this pattern usually, indicates that the direction of the trend may be nearing a turning point.
But, but hang on, it is not as simple as that, and in this case, there is also a couple of other things to take into account.
It looks like the false break above this 50.90 mark may have trapped late joiners, some of whom have been forced to exit their Longs by now.
If the trend is still Bullish then we should see some re-load buying activity once WTI Crude Oil nears or tests some Key support marks.
So we could see some sellers being trapped here now that WTI Crude’s weekly has formed a Bearish-looking pattern inside what remains a Bullish trend.
Sellers need to be wary of that possibility especially after a sharp 3-day counter trend move and as the short momentum indicators are now at “oversold” marks.
The support tend of Bullish channel is now not too far off at the 47.50-48.30 area.
There may be buying activity there on profit-taking from the sellers.
But, if the Bullish channel breaks down then may see an even deeper pullback before WTI Crude Oil makes its next move.
Support marks:48.30 47.50 46.75
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