Oil to close over 50 day moving average

As of 3:00pm it looks like oil is set to close above its 50 day moving average for the first time since the decline began. While this in itself is not a buy signal, there is plenty to like in this chart. In looking at the chart for the United States Oil Fund LP (ETF)(Public, NYSE:USO), it is showing a nice rounding bottom on huge volume. There is a large MACD divergence and it is attempting to clear a small consolidation area near $29.

If oil were to attempt a rally from here, the upside targets would be very nice. Plotting Fibonacci retrace lines yields the first target at the 38% retrace near $60. If you use a more conservative approach, the declining trendline or 200-day moving average are also likely areas. The trend line would intersect price near the $40 dollar mark right now and the 200-day sma is near $65, but constantly moving lower.

If you're interested in further analysis check out this video from INO.com on oil as well.


Good Trading,

Joey