Market Outlook
USOIL Skyrockets, No Bear in Sight

USOIL Skyrockets, No Bear in Sight

28-01-2022 08:32

USOIL Has Shot Up More than 16% since the Start of 2022

Oil prices have been bullish for a sixth week, the longest weekly record since October. Prices have risen sharply amid geopolitical tensions between Russia and its neighbors such as Ukraine. We know that Russia is the second-largest oil producer in the world and a major supplier of natural gas to Europe. Threats to the United Arab Emirates from Yemen’s Houthi movement have also raised concerns about energy supplies.

Quick Recap on USOIL

Since the beginning of the year, the value of USOIL has indeed risen sharply due to the depleting supply of reserves and political tensions between the world’s major countries.

Let’s dive in a little deeper to see how USOIL fare on multiple timeframes:

USOIL Monthly Technical Analysis

USOIL Skyrockets, No Bear in Sight
Graph taken from TradingView.

From the monthly timeframe, the USOIL price is clearly in a strong bullish position. Last month’s candle that closed bullish created solid support in the $66 area. This month’s candle has also surpassed last month’s high and the monthly resistance in the $83.5 area. There is still a chance for USOIL to go to the next key level at $91.5.

USOIL Weekly Technical Analysis

USOIL Skyrockets, No Bear in Sight
Graph taken from TradingView.

On a weekly basis, USOIL looks very bullish with the potential to close bullish for the sixth week in a row. It should be noted that last week’s candle closed weakly bullish and almost Doji. This week’s candle had also broken through the highs and lows of the previous week.

USOIL Daily Technical Analysis

USOIL Skyrockets, No Bear in Sight
Graph taken from TradingView.

On the daily timeframe, we can conclude that USOIL is in a bullish trend as well. Prices moved well above their 50, 100, and 200 moving averages. However, yesterday’s oil price closed the Doji below daily resistance. If today’s price manages to break through yesterday’s low, there is a possibility that the price will go to the next support at $83.5.

Trading idea for USOIL

USOIL Skyrockets, No Bear in Sight
Graph taken from TradingView.

On H1, we can see a Quasimodo or head and shoulder pattern where the price managed to form a new higher high, but fell again and scored a lower low. So it would make sense if the price retested towards the buy area around the new lower high level to create correction momentum for USOIL.

Order: Sell Limit
Entry: 87.80
Stop Loss: 88.60
Target 1: 87.00 (50% + BE)
Target 2: 86.50 (25%)
Target 3: 85.00 (25%)
Risk total: Max 1% Equity (High Risk Setup)
Reason: Quasimodo level and potential evening star pattern on the daily timeframe.

ZFX Analyst’s Predictions

Increases in oil production by producing countries take advantage of rising prices, depleting spare capacity that protects markets from sudden shocks. It also increases the risk of rising prices and even fuel shortages.

On the demand side, China’s crude imports could rebound as much as 7% in 2022. The world’s top oil importer is slowly reversing the rare decline recorded in 2021, with buyers increasing purchases for new refineries and replenishing declining inventories.

From a technical perspective, there is a possibility that the price will correct at a lower timeframe before rising and continuing its long-term trend.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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