[ Jump to the 2024-05-25 update ]
[ Jump to the 2024-05-12 update ]
[ Jump to the 2024-04-21 update ]
[ Jump to the 2024-04-14 update ]
There we go. USO reached its best respected resistance lines.
Last week the U.S. Oil Fund traded through its 312-week EMA (body) line, cracked its 322-week EMA (wick) line, and eventually ended the weekly session in between these lines, at $82.40:
In the two times that USO reached these resistance lines in the past, it turned and headed towards its support lines.
These two support lines have been ascending since October 2022. Together with the two descending resistance lines, these four form an ongoing narrowing price tunnel for USO.
As of January 2022, over two years now, USO has been trading inside the narrowing tunnel. It got squeezed between these support and resistance lines, bounced between floor and ceiling.
The context becomes clearer when looking at a wider view of USO’s price chart, together with its best respected moving average support and resistance lines:
It is the third time that USO knocks on resistance’s door since USO entered the tunnel. It returned to visit the resistance area much sooner after the second visit, compared to the time it took USO to revisit resistance after the first visit.
Now is the time to take notes and bake them into trading decisions. USO may turn and head back to its support area, however, it could also break its resistance area after a very long time and head up, potentially to the $100 area.
2024-04-14 Update
One week in and USO has not taken a decision yet. The ETF hung around its 313-week EMA and 323-week EMA resistance lines:
Last week could have been a pause on the way up or a pivot point for turning down. Next week will provide additional insight.
2024-04-21 Update
Once again, USO’s resistance area held strong and the ETF could not break it. The indecisiveness demonstrated in the week prior to the last one was resolved during the latest weekly session, when sellers took over at the resistance area and pressed the price action downwards:
Is USO on its way to meet support again, which is currently around the $70 area? Based on the zigzag between support and resistance, we cannot say that it is not a viable option.
2024-05-12 Update
In the last three weeks since our last update, we saw U.S. Oil Fund ETF’s price keeping its downward direction.
The floor, defined by the ascending support lines, is now higher, and the distance between the tunnel’s walls is smaller than ever.
This is a price snapshot of the current state:
- USO ended the week at $75.30
- USO’s best respected MA support lines from below:
- 130-week SMA, at $70.82
- 139-week SMA, at $69.80
- USO’s best respected MA resistance lines from above:
- 315-week EMA, at $81.53
- 325-week EMA, at $82.80
USO’s weekly chart beautifully visualizes the squeeze :
The event of breaking out of the narrowing tunnel is approaching. We don’t know the direction of the breakout, however, when that happens, we may see an outsized move.
2024-05-25 Update
Another two weeks have gone by and USO stayed the course. The ascending support lines and the descending resistance lines kept narrowing the gap between them, closing in on the ETF:
