Commodity Spotlight: Oil Ready To Stop Getting Drilled?
On July 23, we pointed out several layers of resistance faced by the United States Oil Fund, USO. It topped that very day at $38.30 and has dropped roughly 10% since. It is now hitting multiple support layers near the $34 level, including:
- 50% Fibonacci Retracement of the post-2012 rally
- 61.8% Fibonacci Retracement of the post-2013 rally
- 78.6% Fibonacci Retracement of the post-January rally
- Post-2012 uptrend line
Should USO not hold the $34 level, there is also multiple support at $33, including:
- 61.8% Fibonacci Retracement of the post-2012 rally
- 78.6% Fibonacci Retracement of the post-2013 rally
- January Low
- Post-2009 uptrend line
Holding the $34 area would be preferable for bulls as it would signify another higher low, maintaining the possible ascending triangle in place since 2012 and suggest an eventual upside resolution to the 3-year trading range. Should prices drop to $33, it would approximate the January low, setting up a horizontal trading range. The breakout from that would be even odds, up or down.
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