Starting with a daily chart it can be seen that USOIL rejected the 200 Simple Moving Average, confirming the validity of a long-term downtrend…
USOIL symbol on the MT4 platform
Key support levels: 36.00
Key resistance levels: 41.50
After price topped out on the August 26 and hitting 43.77 high, it went download sharply. Price has declined down to 36.00 support area, which previously already acted as the demand zone.
Then, the correction up followed and the price has reached and rejected previous support at 41.50, which acted as the resistance this time.
On the 4-hour chart, the 41.50 resistance corresponds to the 23.6% Fibonacci retracement level applied to the corrective move up after breaking below the 200 SMA. The resistance was rejected along with the 200 EMA and the uptrend trendline. This makes 41.50 a key resistance area, and as long as daily closing prices are below this level, USOIL should be expected to move down.
The key support area is near 36.00, which corresponds to the 361.8% Fibs as well as 61.8% Fibonacci retracement level as per the daily chart. It could be that price will move down fast and the downside support will be reached by the end of this month. It means that at the beginning of the next week there could be a strong downside move, which can also start from today.
In the alternative scenario, USOIL will continue to consolidate and might re-test and even spike above the 41.50 resistance. But only daily break and close above can invalidate the expected selling pressure.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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