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Analysis

Oil Technical Analysis | Bullish or bearish trajectory?

BY Janne Muta

|December 15, 2023

Oil Technical Analysis

Oil Technical Analysis, Weekly Chart

Weekly Oil Technical Analysis

The crude oil market has gained momentum this week after a decline from its September high. If the market closes above $71.38, its opening level this week, it would form a weekly bullish rejection candle. This pattern suggests institutional buying and could potentially lead to market rallying higher. The nearest weekly support level is at $67.12.

Currently, the market is trading at a weekly low of $72.33, a level last seen four weeks ago. If this resistance level is breached, the market could likely move towards $73.80. However, as the market is in a long-term sideways range, the moving average-based oil technical analysis presents mixed signals on the weekly chart.

Oil Technical Analysis, Daily Chart

Daily Oil Technical Analysis

The daily chart shows that the market has tested the $72.33 low once and has now returned to this resistance level. If the market rallies above this level, the next key resistance at $74.14 could be tested. This level roughly aligns with the 20-period moving average which adds to the significance of this resistance level.

The moving averages are trending lower, with the 20-period moving average below the 50-period SMA, indicating bearishness according to the indicator-based oil technical analysis. The stochastic oscillator is nearing the overbought zone.

Oil Technical Analysis, 4h Chart

Intraday Oil Technical Analysis

On the intraday chart, the market has formed a small flag pattern today. If this pattern resolves upward, the measured move target of $76 becomes relevant. However, to reach this target, the market needs to break through the $74.14 resistance level and the top of the descending trend channel.

Conversely, if the flag resolves downward, the market could trade down to around $69.50. Currently, the market is trading above the moving averages, which are moving sideways, suggesting potential bullishness according to the moving average-based oil technical analysis.

However, these are still only preliminary indications, and traders are advised to continue monitoring the market's reaction to key price levels and its ability to break through resistance levels. Otherwise the market is likely to remain in a downtrend.

Oil Technical Analysis, Client Sentiment Graph

Client sentiment analysis

59% of clients trading USOIL are holding long positions, while 41% are holding short positions. Client sentiment data is being provided by TIO Markets Ltd.

It’s good to remember that retail client trading sentiment is a contrarian indicator as most retail traders are on average trading against market price trends. This is why experienced traders tend to trade against the retail client sentiment. You can follow the TIOmarkets client sentiment live on our Forex dashboard.

The next key risk events impacting this market

  • USD - Flash Manufacturing PMI
  • USD - Flash Services PMI
  • USD - Building Permits
  • USD - CB Consumer Confidence
  • USD - Crude Oil Inventories
  • USD - Final GDP q/q
  • USD - Final GDP Price Index q/q
  • USD - Philly Fed Manufacturing Index

Potential Oil Market Moves

In a bullish scenario, overcoming the $74.14 resistance could propel the market towards $76. Conversely, a bearish turn might see a decline to around $69.50 if the current flag pattern resolves downward, with key indicators like moving averages and the stochastic oscillator providing critical insights.

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How Would You Trade Oil Today?

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Janne Muta

Janne Muta is a seasoned market analyst and trading educator with a M.Sc. in Finance. His strategies integrate macroeconomics with technical analysis and he shares his knowledge with the trading community.

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