Technical analysis update: WTI oil (2nd December 2021)
Contrary to our expectations, OPEC's meeting resulted in a further drop in the price of USOIL. Sudden drop of more than 2 USD per barrel (to as low as 62.46 USD) occured on headline news regarding the proposal on output hike by Russian Federation.
Sudden selloff is shown on 1 minute chart below:
It took merely 5 minutes for USOIL to drop over 4.3%.
We previously stated that we expected OPEC to ease production as a countermeasure to release of strategic oil reserves by the U.S. and its allies. However, the Russian Federation came forward with the opposite proposal at today's OPEC meeting (to boost production by 400 000 bpd, starting in January 2022).
Price retracement after selloff:
It took approximately an hour for price to retrace headline news selloff.
Overall, we continue to see headwinds for WTI oil in the short-term and medium-term ( mainly due to rise in production, global lockdown measures and ongoing politics between OPEC and the U.S.). Technical indicators show extremely oversold conditions on a daily time frame while weekly time frame suggests that bearish structure may continue to develop further for a little longer. Despite that we remain bullish in the long-term.
Technical analysis - daily time frame
RSI broke into the oversold area for the second time now. We expect its reversal and crossover above 30 points. We expect such an occurrence to be accompanied by a bounce in price. MACD continues to develop bearish structure and it is getting overextended. Stochastic, DM+ and DM- also show bearish conditions. ADX seems to be growing rapidly which suggests that correction nears its end (as peak in ADX often coincides with peak in prevailing trend).
Technical analysis - weekly time frame
RSI, MACD and Stochastic are all bearish. DM+ and DM- show the same conditions. ADX decreases which suggests that trend of higher degree is becoming neutral.
Support and resistance
Major resistance level sits at 85.39 USD while the major support level sits at 61.58 USD. Resistance 1 is at 74.21 USD, Resistance 2 is at 75.47 USD and then Resistance 3 is at 76.95 USD. Medium-term resistance is at 69.60 USD. Short-term resistance appears at 69.21 USD and immediate support/resistance sits at 65.11 USD.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.
Sudden selloff is shown on 1 minute chart below:
We previously stated that we expected OPEC to ease production as a countermeasure to release of strategic oil reserves by the U.S. and its allies. However, the Russian Federation came forward with the opposite proposal at today's OPEC meeting (to boost production by 400 000 bpd, starting in January 2022).
Price retracement after selloff:
Overall, we continue to see headwinds for WTI oil in the short-term and medium-term ( mainly due to rise in production, global lockdown measures and ongoing politics between OPEC and the U.S.). Technical indicators show extremely oversold conditions on a daily time frame while weekly time frame suggests that bearish structure may continue to develop further for a little longer. Despite that we remain bullish in the long-term.
Technical analysis - daily time frame
RSI broke into the oversold area for the second time now. We expect its reversal and crossover above 30 points. We expect such an occurrence to be accompanied by a bounce in price. MACD continues to develop bearish structure and it is getting overextended. Stochastic, DM+ and DM- also show bearish conditions. ADX seems to be growing rapidly which suggests that correction nears its end (as peak in ADX often coincides with peak in prevailing trend).
Technical analysis - weekly time frame
RSI, MACD and Stochastic are all bearish. DM+ and DM- show the same conditions. ADX decreases which suggests that trend of higher degree is becoming neutral.
Support and resistance
Major resistance level sits at 85.39 USD while the major support level sits at 61.58 USD. Resistance 1 is at 74.21 USD, Resistance 2 is at 75.47 USD and then Resistance 3 is at 76.95 USD. Medium-term resistance is at 69.60 USD. Short-term resistance appears at 69.21 USD and immediate support/resistance sits at 65.11 USD.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.
Trade active:
Short-term resistance has been penetrated which is bullish.
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