United States Oil (USO) potential reduction in crude output

United States Oil (USO) potential reduction in crude output

United States Oil (USO) potential reduction in crude output 

U.S. oil futures turned lower in Monday dealings, reversing course after discussions among major oil producers over a potential reduction in crude output had pulled prices higher. A lower settlement for the U.S. benchmark would mark its eleventh in a row and longest streak of session declines on record for a front-month futures contract.

Oil prices had turned lower before U.S. President Donald Trump said in a tweet that he hopes Saudi Arabia and OPEC won’t cut oil production and said oil prices should be much lower based on supply. December West Texas Intermediate oil CLZ8, -1.40% was down 14 cents, or 0.2%, to trade at $60.05 a barrel on the New York Mercantile Exchange.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 13.96.

The projected upper bound is: 13.11.

The projected lower boundis: 11.76.

The projected closing price is: 12.44.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 19 white candles and 28 black candles for a net of 9 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with UNTD ST OIL FUND), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 6.8592. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 11 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 19.27. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 27 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 -122.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 11 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 23 period(s) ago.

Rex Takasugi – TD Profile

UNTD ST OIL FUND closed down -0.220 at 12.480. Volume was 64% above average (neutral) and Bollinger Bands were 77% wider than normal.

Open High Low Close Volume___
12.860 12.970 12.440 12.480 34,847,028

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

Moving Averages: 10-period 50-period 200-period
Close: 13.22 14.58 13.82
Volatility: 12 29 30
Volume: 28,477,272 21,938,320 21,012,446

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 is currently 9.7% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume out of USO (mildly bearish). Our trend forecasting oscillators are currently bearish on USO and have had this outlook for the last 19 periods. Our momentum oscillator is currently indicating that USO is currently in an oversold condition.

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