Is Crude Oil ETF USO Forming a Bottom?

24 de abr. de 2020

After a prolonged slide, crude oil ETF USO seems to be forming a bottom at $2.50 based on RSI pattern on 4 hr chart. However, there may be more room to go down before the bottom is complete. If a break to the upside in the oil prices to occur, it will be driven by positive news of OPEC + production cuts, as well as reopening of the economy. Investors may need to see actual inventories to go down before putting their money into Oil.

24 de abr. de 2020

Nota

Crude Light June 2020 futures bottomed at $7 and are now trading at $18, while USO keeps sliding. The bottom for USO may be forming at around $2. On the USO chart, we have unfilled gaps between $6.9 and $8.5 price levels, and a smaller one between $6 and $6.5. Since USO is an ETN, those gaps may not get filled due to price decay. Looking back at the Oil prices, a price of $8.5 on USO chart corresponds to $35 on Crude Light futures (/CL) chart. It is possible, that Oil will get to this level over time. The USO will have to break through $6 level first, and then go higher to fill the gap at $8.5. This may be possible only with a sharp break to the upside in Oil prices.