Technical analysis of USOIL
American light oil has continued to make gains this week, reaching a new high today above $53, an 11-month record. Inventory in the USA is expected to fall this week, while the prospect of rising inflation as a result of fresh fiscal stimulus in the USA has boosted sentiment on the commodity. This technical analysis of USOIL looks at the four-hour chart plus futures and annual futures.
There is no obvious high resistance on this chart. One possibility is the 100% weekly Fibonacci extension area very slightly below $56. To the downside, visual support occurs around $47.60, but the psychological area of $50 and other zones from moving averages are likely to be more important over the next few days in the event of a retracement downward.
Technical indicators on USOIL H4
Moving averages continue to give a strong buy signal, with each of the 50, 100 and 200 SMAs successively above slower lines and below the price. The main area of support in view from moving averages is the 50 SMA from Bands, strengthening the psychological area of $50.
Bollinger Bands (50, 0, 2) do not currently indicate overbought, but price is very close to the upper band. The wider space between the upper and lower deviations suggests continuing volatility. The slow stochastic (15, 5, 5) though at 81 has recently move back into the trigger zone for buying saturation. There is currently no clear signal from volumes, with both buying and selling remaining basically in line with the average during December.
Price action and Fibonacci
The fundamental upward movement continues for now, with liquidity-based downward reactions having been overcome very quickly on this chart since late last year. The current period’s high challenged the next round number of $53 without proven success so far. This was the fifth new high in 2021, so based purely on price action one might expect the uptrend to continue.
The 61.8% daily Fibonacci expansion area is the main zone in focus from Fibo. With this having been broken, we might expect it to flip to support. As noted above, the 100% Fibo expansion might be a target for some buyers just below $56. To the downside, 38.2% from the weekly Fibonacci fan is likely to be an important support over the next few weeks, especially after its confluence with the 61.8% expansion.
Futures on USOIL
Futures on American light oil (NYMEX, continuous with current contract at front) display a fairly similar picture to Exness’ spot CFD on the same. We can see five new highs in January 2021 so far. The main difference here is that buying volume clearly dominates selling, especially earlier this month when there was a large spike.
Annual futures on USOIL
Volume for futures further ahead has been relatively high considering the time of year and the average for December. However, we can see that there is no contango here – the six-month difference is slightly less than negative 2%. This might indicate that participants expect a retracement from the current area on the spot’s chart, but equally it could suggest instead that futures for the second half of 2021 have yet to recalibrate to spot crude’s recent gains.
Technical analysis us USOIL: summary
Overall the technical picture for American light oil remains positive; based on the four-hour chart of USOIL, more gains might be expected in the near future. On the other hand, overbought is a possible concern, since the speed of the uptrend might not be sustainable.
Furthermore, the absence of a contango for futures challenges the ‘normal’ situation and might suggest reluctance of participants to push prices higher. More details of the Democrats’ proposed stimulus and of course tomorrow’s American inflation might provide some clarity.
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