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USOil down to Multi-Weeks Support at 20-DMA

Market Analysis

USOil, H4, Daily

USOil, is off by 0.5% presently, at $57.10. This is the second Daily session of declines. Data showed U.S. output rising to a rate of 9.5 mln barrels per day during September, while the subsequent march in prices to near $60.0 is widely expected to encourage further expansions in production, above the 10.0 mln bpd mark, as more fields become viable, which would offset the extension of the OPEC-led oil production curtailment accord. The brighter fundamental picture in Canada has offset the softer tone in oil prices that’s been seen since last week’s OPEC meeting.

Today USOil is traded just 10 cents above the 9-Day support level and teh confluence of 20-Day MA at $57.00. The 20-DAy MA level provided a good support area for USoil since early october. the last 2 days, the future took back all gains saw last week. The long-term momentum indicators however present a neutral picture, with RSI and Stochastic remaining above 50 and a positive MACD.  It is likely to see USOil entering into a consolidation or simply a correction mode around $57.00, since the intraday chart (4-hour chart), present a limited selling pressure of the Future. The hourly bearish candles becoming smaller and smaller, while the Intra-day momentum indicators signalling as well that Bears are losing some of the control, with Stochastic oversold and RSI at 39 giving a limitation on the downside, with next support at 56.50-56.70.

The USOil, remain in the watch list, since only a  Break below the 20-Day MA , support level at 57.00 and more precisely below the last down fractal at 56.50 , will triggered a possible downside move, to the 4-hour support and  200-period MA at 55.74, and lower to 50-Day EMA at 54.70. A clear buying opportunity and a continuation of the sharp uptrend seen since October, could be considered only with the breach and break of the recent highs at 58.20-58.30.

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Andria Pichidi

Market Analyst


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