Wednesday’s Technical Outlook For: WTI Crude Oil (USO)

$USO

As the daily chart for WTI Crude Oil below (fig. 1) shows, in figure. US Crude Oil is in a consolidation mode as it oscillates around its 50-Day MA in a pennant-like formation at 45 bbl.

Also, RSI is also in a tight range, holding below the Key 60 mark. If RSI breaks above 60 then this could precede a break North in prices, if if the indicator moves below 40 then it would confirm more Bearish momentum.

Looking at the weekly chart of WTI Crude Oil seen below (fig 2), reveals a similar indecisive price action in the Doji candles.

A Doji candlestick is formed when the opening and closing prices are roughly the same with the candles containing wicks on either side.

As can be seen, 2 such candles have completed and a 3rd 1 is potentially being formed this week. These Doji candles are formed after the creation of that large Bullish engulfing candle we saw at the end of August when the sellers were unable to hold their ground below the prior Y 2015 lows at the 42-44 range.

That could have been a false breakdown and a potential reversal formation, the lack of follow-through in buying momentum has decreased the probability of such an outcome.

But, the lows of the candles of the past 4.5 weeks have been near the upper end of that 42-44 , suggesting that the potentially Bullish setup may still be in the development stage.

As the Bulls and Bears battle it out, conservative traders are standing on the side lines for WTI Crude Oil to make up its mind before entering any trades.

As things are noe, a weekly close below 44 would be a Bearish outcome, and a break above the trend line and the August high at 49.30 would be Bullish.

Rest assured that Crude Oil prices will break out soon, but it is extremely difficult to say which direction the breakout will be just yet. Either way, the breakout should open some good trading opportunities in WTI Crude Oil.

Position: Neutral, waiting to see.

Crude Oil has fallen this year and US gasoline demand softened. WTI Crude Oil could fall to as low as 10 bbl as the Organization of Petroleum Exporting Countries (OPEC) engages in a “Price War” with rival producers, testing who will cut output 1st.

Iran is soon to release 53-M bbl to the market and will be producing up to 1.5-M BPD in 6 months or so.

Long term outlook for both Brent and WTI Crude Oil is due South.

OPEC says it will cut production, and are going to see who can stand lower prices longest, since October of 2014 HeffX-LTN sees that Crude Oil is likely is headed for 20 – 22 bbl in the mid term.

Stay tuned…

HeffX-LTN

Paul Ebeling