Oil Technical Analysis | Market Drops 11% From a Lower Swing High
BY Janne Muta
|November 7, 2023USOIL remains bearish after the market created a lower swing high at 89.65. The subdued global economic outlook and the greater likelihood that the Middle East crisis is contained and will not spread to the wider region have turned institutional money managers into sellers of oil. Now, USOIL trades 11.5% lower than the lower swing high created in October. The current market price is below the price level at the time of the Hamas terrorist attack in Israel.
Summary of This Oil Technical Analysis Report:
- USOIL is trading lower for the third consecutive week. The lower swing high the market created in October suggested we could see a move to the 77.55 weekly support level.
- The daily chart shows the market breaking below the 50% Fibonacci retracement level at 80.62. The market remains bearish below this level, while a sustained rally above it could take the market to 83.32.
- The 4-hour chart reveals another much tighter bearish trend channel. The nearest resistance level is at 80.09, while the 50% Fibonacci retracement level identified in the daily oil technical analysis is also close.
Read the full Oil Technical Analysis report below.
Oil Technical Analysis
Weekly Oil Technical Analysis
USOIL is trading lower for the third consecutive week. The lower swing high the market created in October suggested we could see a move to the 77.55 weekly support level.
Potentil Target Area
This level coincides with the 61.8% Fibonacci retracement level and is roughly aligned with the 50-period moving average at 78.15. Oil technical analysis suggests that traders who shorted the market after the lower swing high was created could be targeting this price range (77.51 - 78.15). Therefore, we could see profit-taking within this price range.
Alternatively, a decisive break below 77.51 could push the market down to 72.60. At the same time, indicator-based oil technical analysis suggests that the market is becoming oversold, with the stochastic oscillator below the 20 level.
Daily Oil Technical Analysis
The daily chart shows the market breaking below the 50% Fibonacci retracement level at 80.62. The market remains bearish below this level, while a sustained rally above it could take the market to 83.32.
Bearish Trend Channel
USOIL is moving lower inside a bearish trend channel and could be heading to the 61.8% Fibonacci retracement level at 80.62, as the market doesn't have any significant resistance points above this price level.
As per indicator oriented oil technical analysis, the market is oversold. The stochastic oscillator is in oversold territory, but the 20-period moving average is below the 50-period suggesting the market remains bearish.
The bear channel's low is currently at 74.70. This level is somewhat aligned with a market structure level at 74.34. The price range (74.34 - 74.70) could come into play if the 77.55 support level fails to attract buyers.
Oil Technical Analysis, 4h
The 4-hour chart reveals another much tighter bearish trend channel. US oil has been trading inside this channel since October 27th and has since been creating lower lows and lower highs. The nearest resistance level is at 80.09, while the 50% Fibonacci retracement level identified in the daily oil technical analysis is also close.
Oil technical analysis indicates that should the market rally, it would make sense to monitor price action at these levels to see if the selling pressure resumes.
Alternatively, if the market gains enough upside momentum to push higher, the next key price area is near the 82 level, where a market structure level, the 50-period moving average, and the top of the bearish trend channel are closely aligned.
Client sentiment analysis
TIOmarkets' clientele are bullish on USOIL, with 62% of clients holding long positions and only 38% shorting the market.
Please remember that the retail trader client sentiment is a contrarian indicator as most of the retail traders are on average betting against the market 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 - FOMC Member Waller Speaks
- USD - Unemployment Claims
- USD - Fed Chair Powell's Speech
- USD - Prelim UoM Consumer Sentiment
- USD - Prelim UoM Inflation Expectations
Potential Oil Market Moves
The daily chart shows the market breaking below the 50% Fibonacci retracement level at 80.62. The market remains bearish below this level.
Should there be a sustained rally above 60.62 we could see the market trading to 83.32.
How would you trade the Oil today?
I hope this fundamental and technical Oil analysis helps you to make better informed trading decisions. Check the latest market analysis for other instruments and subscribe to receive them in your inbox as soon as they are published
DISCLAIMER: TIO Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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