Bullish trend is still relatively weak

West Texas Intermediate crude oil continues to trade within the upward-sloping channel. However, its bullish trend remains weak, as reflected in the relatively low (but growing) value of ADX (on the daily time frame). In the past two trading sessions, the daily RSI continued to flatten, Stochastic turned lower, and MACD performed a bearish crossover while staying above the midpoint. With these developments unfolding, we pay close attention to the 20-day SMA and resistance levels at $79.25 and $79.72. The price’s ability to retest these resistance levels and ideally maintain a ground above them will bolster a bullish case in the short term. In contrast, a breakdown below the 20-day SMA might hint at oil wanting to slide toward the channel's lower bound.

Illustration 1.01

Illustration 1.01 shows the daily graph of USOIL and two simple moving averages. The yellow arrow indicates the oil’s recent retracement toward its 20-day SMA, which acts as a support.

Illustration 1.02

Illustration 1.02 shows the daily MACD. The yellow arrow highlights a bearish crossover between the MACD and signal lines. While this is slightly bearish, it is important to note that MACD remains in the bullish territory.

Illustration 1.03

The chart above illustrates simple support/resistance levels derived from past peaks and troughs; one more alternative resistance lies at $79.72.

Technical analysis
Daily time frame = Bullish (weak)
Weekly time frame = Neutral

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.

Comment:

The bullish trend loses momentum ahead of OPEC's monthly report.