TECHNICAL/CHART ANALYSIS:
1. As seen by the orange triangles, USOIL is currently in a short term consolidation on the hourly chart.
2. On the daily chart it is just coming off of the RSI oversold level, and the MACD signal line is being crossed (both typically bullish indicators).
3. It seems to have found an intermediate support at around the 20/21 price level, which it has bounced from twice.
4. The MACD and RSI are both showing bullish divergence on the hourly chart as shown by the black lines.
5. Volume has been gradually decreasing over the last few days, showing signs that the aggressive selling is over for the near term.
6. First support/resistance level at around 28. If it breaks past this level, the next support/resistance will be around 33/34, which I don't think it will break through. Fibonacci retracement confirmed both of these support and resistance levels, as shown on the chart.
FUNDAMENTAL ANALYSIS:
Fundamentally, USOIL does not have a good case for two primary reasons:
1. Global shutdown due to the corona virus, leading to a significant decrease in demand for energy commodities such as USOIL from both businesses and consumers.
2. After the corona virus was clearly making a negative impact on global oil demand, the world's largest oil exporting nations (OPEC) met to discuss cutting production levels to help prop-up oil prices (decrease supply to increase prices). Russia was defiant to cutting their production any further as other nations, such as Saudi Arabia, pushed them to do. OPEC ended their talks with no agreement. And not only did they not agree on further production cuts, they disbanded the previous production cut agreements, leading to a significant increase in supply as all oil producing nations became free to pump as much oil as humanly possible, thus increasing the supply by millions of barrels a day. Some speculate that Russia left the bargaining table at OPEC intentionally, as they have the lowest break-even price per barrel compared to any other nation. They also have been building up their cash reserves over the last few years. Saudi Arabia and the US have much higher break-even prices, so the price war may be an attempt to bankrupt Saudi and US oil companies. The reason I mention this is to point out the fact that Russia has shown no signs of changing their minds, stating previously that they would be able to withstand oil prices this low for years. If this is correct, don't expect any significant trend reversals any time soon, oil can still go a lot lower if OPEC doesn't come to a deal.
***NOTE*** No, I don't expect the price line to follow my lines exactly. I don't have a crystal ball, but the point is SHORT TERM LONG, LONG TERM SHORT.
PLEASE MAKE SURE TO LIKE AND FOLLOW FOR MORE.
1. As seen by the orange triangles, USOIL is currently in a short term consolidation on the hourly chart.
2. On the daily chart it is just coming off of the RSI oversold level, and the MACD signal line is being crossed (both typically bullish indicators).
3. It seems to have found an intermediate support at around the 20/21 price level, which it has bounced from twice.
4. The MACD and RSI are both showing bullish divergence on the hourly chart as shown by the black lines.
5. Volume has been gradually decreasing over the last few days, showing signs that the aggressive selling is over for the near term.
6. First support/resistance level at around 28. If it breaks past this level, the next support/resistance will be around 33/34, which I don't think it will break through. Fibonacci retracement confirmed both of these support and resistance levels, as shown on the chart.
FUNDAMENTAL ANALYSIS:
Fundamentally, USOIL does not have a good case for two primary reasons:
1. Global shutdown due to the corona virus, leading to a significant decrease in demand for energy commodities such as USOIL from both businesses and consumers.
2. After the corona virus was clearly making a negative impact on global oil demand, the world's largest oil exporting nations (OPEC) met to discuss cutting production levels to help prop-up oil prices (decrease supply to increase prices). Russia was defiant to cutting their production any further as other nations, such as Saudi Arabia, pushed them to do. OPEC ended their talks with no agreement. And not only did they not agree on further production cuts, they disbanded the previous production cut agreements, leading to a significant increase in supply as all oil producing nations became free to pump as much oil as humanly possible, thus increasing the supply by millions of barrels a day. Some speculate that Russia left the bargaining table at OPEC intentionally, as they have the lowest break-even price per barrel compared to any other nation. They also have been building up their cash reserves over the last few years. Saudi Arabia and the US have much higher break-even prices, so the price war may be an attempt to bankrupt Saudi and US oil companies. The reason I mention this is to point out the fact that Russia has shown no signs of changing their minds, stating previously that they would be able to withstand oil prices this low for years. If this is correct, don't expect any significant trend reversals any time soon, oil can still go a lot lower if OPEC doesn't come to a deal.
***NOTE*** No, I don't expect the price line to follow my lines exactly. I don't have a crystal ball, but the point is SHORT TERM LONG, LONG TERM SHORT.
PLEASE MAKE SURE TO LIKE AND FOLLOW FOR MORE.
Comment:
SCENARIO B: USOIL hits the 28 resistance level and does not pass it, just continues to the downside.
Comment: