technical analysis UKOIL

Technical analysis of UKOIL

Brent crude has continued to strengthen since Monday, on track for its seventh successive week of gains as vaccines against covid continue to be rolled out and the outlook for demand improves. Meanwhile data from refineries in China and India this week have shown record high demand. This technical analysis of UKOIL looks at the four-hour chart plus futures.

There is no clear resistance on this chart now that $50 has been broken. Low support meanwhile might occur around $45, but areas from moving averages and Fibonacci are likely to be more important in the immediate future.

Technical indicators on UKOIL H4


Moving averages continue to give a strong buy signal, with all of the 50, 100 and 200 SMAs successively above slower lines and below the price. The initial support from moving averages is the 50 SMA from Bands which has supported the price since the beginning of the month, but the value area between this and the 100 SMA is also in view as a support.

There is no overbought signal at the moment from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5) although the latter at 76 is very close to the zone of buying saturation. Buying volume remains high and in line with the average since this time last month, which is unusual because one might typically expect a dropoff in volume before Christmas to have started by now.

Price action and Fibonacci


The large number of consecutive up periods on this chart plus the daily and indeed weekly charts means that the current fundamental movement is likely to continue unless there’s a significant change in sentiment or fundamentals. Four new highs can be counted on this four-hour chart alone, and the lack of a clear resistance plus the obtuse angles of consolidations also make continuation upward favourable.

Price has now moved outside the 38.2% area of the weekly Fibonacci fan, which might suggest overbought or a slightly deeper consolidation given this area’s importance as a resistance during the uptrend last month and earlier in December. Below this, the 61.8% weekly Fibonacci retracement area is likely to be a significant barrier zone which might cap any bout of losses to come at least temporarily.

Futures on Brent


technical analysis UKOIL

This chart of futures on Brent (continuous with current contract at front) from the MOEX displays a similar picture to that of the spot CFD. We can see five or six new highs here and fairly high volume, but the main difference is the large spikes in buying volume early last month during the first few days of the bounce. The lack of any corresponding spike in selling suggests that more gains are ahead sooner or later.

Technical analysis of UKOIL: summary


Overall the technical picture for Brent is very positive with more gains likely in the New Year if not before. As usual, though, traders should be prepared for sudden changes in sentiment affecting the chart significantly. Today’s data affecting oil are Baker Hughes’ regular rig count, while next week traders will look ahead to the usual releases on stocks from the API and EIA.

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