USOIL Down on TA Signals and China’s Demand

Crude Oil (USOIL) is going down on Monday. The main reason is the concern about the demand from China. The leading commodity importer is struggling due to the COVID-19 zero-tolerance policy and the slowing down of international trade. Let’s see the technical analysis outlook for the USOIL Down situation and the rest of October for the WTI crude oil.

Little Chance For USOIL Trend Reversal

The West Texas Intermediate crude oil went down from $93.49 per barrel on October 7 to $83.41 on Monday, October 24. The decline happened despite China increasing the monthly exports by 2% year-to-year in August. Nevertheless, investors are looking into the future, and the increase wasn’t significant enough to cause a bullish run on oil.

The USOIL went up last week, and even the strong statement by US President Joe Biden wasn’t enough to stop the rising prices. The US is going through a record release of the Strategic Petroleum Reserves. Since May, they introduced a record plan of selling 180 million barrels of oil. Biden announced that the administration would start accumulating when the market price hits $70 per barrel.

On the other hand, Goldman Sach’s analysts don’t expect the strategic reserve release to impact the USOIL price action substantially.

USOIL Down: The Technical Outlook

Many technical analysis indicators point to USOIL being overpriced in a short timeframe (1 day) and medium timeframe (1 week) but underpriced in a more extended scale (1-month charts).

In this chart, we are analyzing the 1-day outlook. The Stochastic RSI is below the bullish level. Despite some (relatively weak) signs of a bullish formation that might have started at the end of September, the red channel seems to dominate. We can observe strong support around $76 per barrel and even stronger at $66 per barrel, which is below the level ending the US governmental intervention.

USOIL is struggling to reverse the trend (Source: SimpleFX WebTrader)

In a shorter time horizon, traders should try to discount Thursday’s release of the advanced GDP growth forecast for the US economy at 14:00 UTC (marked by the blue vertical line). Analysts are bullish and expect 2.4% growth (compared to -0.6% in the previous period). Markets should react strongly to any deviation from the forecast.

Read more:

Weekly Trading Forecast October 24-28, 2022

Chinese Banks Get Rid Of Dollars On Swap Markets

EURUSD Technical Outlook: Is That A Trend Change?