Technical Outlook for WTI Crude Oil (USO)

Technical Outlook for WTI Crude Oil (USO)
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.

  1.  The RSI on daily time frame had been severely overbought, so a near-term pullback was almost inevitable. The momentum indicator may need to unwind further either through time or price action before the buyers step back in.
  2. The prior swing high was at 50.90, where lots of Bullish traders “clustered” to book profits.

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
Resistance marks: 49.45 50.20 50.90

Stay tuned…


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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