In our last idea on oil, we outlined a scenario for a downtrend correction if the breakout above the sloping resistance took place. A few days later, the breakout occurred, and technical indicators turned bullish. Additionally, a slight change in the rhetoric of OPEC came, with Saudi Arabia and other members hinting at looming production cuts. This development forces us to abandon our price targets because of OPEC's ability to maintain a floor or a lid on oil prices. We will update our thoughts as we get more information concerning the cartel's production. Until then, we abstain from setting price targets for USOIL.
Illustration 1.01 The chart above shows the bullish breakout above the prior resistance.
Technical analysis - daily time frame RSI is bullish. The same applies to Stochastic and MACD. However, MACD stays below 0 points; if it breaks above, it will be bullish. DM+ and DM- performed bullish crossover. Overall, the daily time frame is bullish.
Technical analysis - weekly time frame RSI strives to reverse to the upside; the same applies to Stochastic and MACD. DM+ and DM- are bearish. Overall, the weekly time frame is neutral/slightly bullish.
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.
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A bearish position can be retaken if the breakout below the sloping support occurs. However, for now, we still abstain from setting a price target. We will update our thoughts on USOIL soon.