Crude Oil Struggles After a Feeble Bounce
Crude oil futures slid sharply in the second half of 2022. Now after a feeble bounce, is there more downside risk?
The first pattern on today’s chart is the price area near 81.30. It was a weekly low in mid-October where prices struggled in early December, early January and again in recent sessions. That could make some traders think old support has become new resistance.
Second, the price level represents a 50 percent retracement of the move between a weekly closing high in early November and the December low.
Third, the early November peak occurred near the 100-day simple moving average (SMA). Oil prices have been stalling there again in late January.
Next, stochastics are retreating from an overbought condition.
Finally, the fundamentals could be weakening as U.S. inventories inch higher. This week’s OPEC+ meeting is also expected to bring no change in production, even as Russian exports increase.
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Security futures are not suitable for all investors. To obtain a copy of the security futures risk disclosure statement Investment and Trading Disclosures Booklet – Futures.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
The first pattern on today’s chart is the price area near 81.30. It was a weekly low in mid-October where prices struggled in early December, early January and again in recent sessions. That could make some traders think old support has become new resistance.
Second, the price level represents a 50 percent retracement of the move between a weekly closing high in early November and the December low.
Third, the early November peak occurred near the 100-day simple moving average (SMA). Oil prices have been stalling there again in late January.
Next, stochastics are retreating from an overbought condition.
Finally, the fundamentals could be weakening as U.S. inventories inch higher. This week’s OPEC+ meeting is also expected to bring no change in production, even as Russian exports increase.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Security futures are not suitable for all investors. To obtain a copy of the security futures risk disclosure statement Investment and Trading Disclosures Booklet – Futures.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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