Below is an excerpt from today’s subscriber-only DecisionPoint Alert (Subscribers, forgive the repeat performance):
CRUDE OIL (USO)
IT Trend Model: SELL as of 2/2/2023
LT Trend Model: SELL as of 12/6/2022
USO Daily Chart: USO obliterated support today and closed at New 52-Week Lows. There is a long tail on today’s candlestick which implies quite a bit of improvement occurred to pare down even larger losses. It is “hammer-like” so we could see at least a pause in this decline. The RSI, PMO and Stochastics all imply more downside. We do think a rebound is likely tomorrow based on the enormously high readings on the Crude Oil Volatility Index ($OVX).
We decided to include the weekly chart today so that we can see where new support might lie. Interestingly, USO’s low landed right on very strong support. There is still some room for $WTIC to drop lower. As bad as the daily chart looks we do find at least some comfort when we see how this support level sits on gap support from 2020, the 2021 high and end of year lows in 2022. The weekly PMO certainly doesn’t inspire confidence as it dipped into negative territory. If this support level is taken out, we would look for support around 50.00.
Conclusion: We see a likely rebound ahead for Crude Oil (USO) possibly just below current support levels based on $WTIC’s support level not being reached yet. However, if we don’t see improvement on the weekly chart, particularly the weekly PMO, we should expect prices to fall to at least the $50.00 level for USO.
Good Luck & Good Trading,
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Erin Swenlin is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master’s degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor’s degree in Mathematics from the University of Southern California.