United States Oil (USO) closing below a key short-term level

United States Oil (USO) closing below a key short-term level

United States Oil (USO) closing below a key short-term level

Crude-oil prices early Monday were trading sharply lower, with the U.S. benchmark on track to drop beneath a key short-term level that could imply near-term momentum for the commodity is eroding. August West Texas Intermediate crude CLQ8, -0.15% was trading at $69.56 a barrel, off 2%. The U.S. oil contract’s short-term 50-day moving average stands at $69.50 a barrel, and hasn’t closed below that short-term line since June 25, according to FactSet data.

Market technicians regard moving averages as a a measure of bullish and bearish momentum in an asset. Market participants have been watching a highly anticipated meeting in Helsinki between President Donald Trump and Vladimir Putin, which could help determine the near-term outlook for oil. The Organization of the Petroleum Exporting Countries and major producer Russia have been holding back crude output since the start of last year, and agreed in late June to begin increasing production by up to one million barrels a day amid global supply disruptions. However, Trump has been voicing criticism of a recent runup in prices and has demanded that OPEC lift production further to drive prices lower.

Meanwhile, Brent oil LCOU8, -4.59% the international benchmark, was off 2.4% at $73.53 a barrel. Still, U.S. oil has rallied by 15.3% so far this year and Brent has gained more than 10%. By comparison, the S&P 500 index SPX, -0.10% has gained 4.8% thus far in 2018, a popular energy fund, the Energy Select Sector SPDR ETF XLE, -1.15% has gained 5.5%, while the Dow Jones Industrial Average DJIA, +0.18% has risen by 1.2%.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 14.03.

The projected upper bound is: 14.73.

The projected lower bound is: 13.16.

The projected closing price is: 13.94.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.5846. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 44.54. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 9 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -158.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.530 at 13.940. Volume was 54% above average (neutral) and Bollinger Bands were 68% wider than normal.

Open High Low Close Volume___
14.200 14.230 13.860 13.940 31,198,468

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 14.68 14.05 12.57
Volatility: 37 36 29
Volume: 22,408,428 21,721,606 18,689,438

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

UNTD ST OIL FUND gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
UNTD ST OIL FUND is currently 10.9% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of USO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on USO and have had this outlook for the last 12 periods.

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