Hot on the charts right now: USOIL & US500
By Antreas Themistokleous
15 September 2023
Crude Oil (USOIL)
Oil prices rebounded as markets focused on a tighter crude supply outlook for the rest of 2023. Demand is expected to remain strong while fears of insufficient supplies are driving prices higher. Saudi Arabia and Russia's extension of cuts will lead to a market deficit through the fourth quarter, according to the International Energy Agency. A lack of cuts in 2024 could create a surplus, but stocks will be at uncomfortably low levels.
OPEC also forecasts robust growth in global oil demand in 2023 and 2024. Despite a surprise build-up in US crude and fuel inventories, expectations of the Federal Reserve not raising interest rates, and strong oil demand, continue to support prices.
From a technical viewpoint, the price has been trading in an upward channel for almost a month and is currently testing the channel’s lower boundary. The 50-day moving average is trading well above the 100-day, indicating the overall bullish momentum is still valid and it’s possible to see that continuing in upcoming sessions.
On the other hand, the Stochastic oscillator is near its extreme overbought level, possibly signaling a minor correction in the near short term. If this happens, then the first major technical support level might be seen at around $87.50, at 38.2% of the weekly Fibonacci retracement level.
S&P 500 (US500)
The S&P 500 and Nasdaq 100 both closed with modest gains in yesterday's session (13 September) after the latest US inflation data was published. The US consumer price report showed an increase in August, but the core CPI eased, providing some support for stocks. Movers included JB Hunt Transport Services, Moderna, Morgan Stanley, Westrock, and Ford Motor, while commercial real estate brokerage and airline stocks faced pressure.
Apple saw a decline of around 7% in the last week after China flagged security incidents with its iPhones.
The market’s anticipating a pause on interest rate rises at the Federal Reserve’s next meeting on 20 September, a stance expected to remain until June next year. On the other hand, that’s up for debate, since inflation data over coming months will most certainly have an effect on these probabilities for the medium to long-term outlook regarding monetary policy.
According to technical analysis, the index level is trading in a dynamic area between the 50 and 100-day moving averages. It’s currently testing the resistance of the 50-day moving average and is also just above the 23.6% of the daily Fibonacci retracement level. The Stochastic oscillator is not in extreme overbought or oversold levels, indicating that the short-term direction could go either way. For the time being, the fact that the faster-moving 50-day average is trading above the slower 100-day is a validation of the overall bullish trend.
Should the index level move to the downside, then the first point of major technical support could lay around the 23.6% mark of the Fibonacci retracement level and the 100-day moving average.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.
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