In our previous update on West Texas Intermediate crude oil, we updated our price target from long-term to medium-term. Additionally, we stated that this price target could soon become short-term, depending on oil market developments. Today, finally, USOIL hit a new yearly low at 73.62$, further confirming our bearish thesis. Accordingly, we continue to maintain our price target at 70$.
Our views are based on a combination of fundamental and technical factors. We expect the global recession to weigh heavily on oil prices in the coming months. In addition to that, we expect the United States to offset any price increases with more releases of Strategic Petroleum Reserves (SPR).
As if it was not enough, turmoil in China also does not support the bullish narrative, putting higher prices at risk. The same applies to OPEC member countries that seek to increase their production despite a slowing economy. Overall, we have no reason to change our bearish outlook.
Illustration 1.01 Illustration 1.01 displays the daily chart of USOIL.
Technical analysis - daily time frame RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02 The illustration shows the daily chart of USOIL, simple support/resistance levels, and two moving averages. At the moment, the price appears too far from these moving averages, likely foreshadowing a correction to the upside (as the price deviated too far from its MAs). Now, these MAs act as significant resistance levels.
Technical analysis - weekly time frame RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is 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. Therefore, your own due diligence is highly advised before entering a trade.
Trade attivo
⋅
We upgrade our medium-term price target of 70$ to a short-term price target.
Great job mentioning China. I don't see too many traders commenting on China and the unfolding events there. I also like to keep in mind that the tiny bit of China info we actually get to see and hear is most likely just the very tip of the iceberg and that in all likeliness it is much worse there than we even know. But to put things into perspective, let us consider China going into a nationwide civil uprising... The world financial stage would catch on fire and it would take years to rebuild. All eyes should be on China right now.
Tradersweekly
⋅
@cryptospawn, Definitely, business activity in China is dropping; rates for freight, materials, etc., are all falling dramatically this year. Thank you very much for your input.
wargolynch
⋅
It's retesting up to 55$ and then going to infinite because of scarcity and high demand, before going back to zero in a very long time. Same for gas and coal, a good thing for the planet!
Tradersweekly
⋅
@GreenValleyTrading, Thank you once again for sharing your chart with us!
Great entry point, thanks for the suggestion, I'll look into it more today. Have a good trade!
UnknownUnicorn15614419
⋅
That's a very interesting point of view. I think this scenario is possible for collecting liquidity, it would be very useful. And in the longer term, I'm looking at a price move in the other direction. Thanks for the hard work, mate)