USOil (WTI) Shows Signs of Ending Major Downward Retracement

Market Analysis – January 31

USOil appears to be nearing the end of its major downward retracement. Current indicators suggest that the price may soon reverse its recent decline. The Simple Moving Average (SMA) at $73.90 is acting as resistance, while the MACD histogram shows weakening bearish momentum. The MACD line remains slightly below the signal line, indicating short-term bearish pressure. However, the decreasing red bars suggest that selling momentum is diminishing. If the MACD crosses above the signal line, it could confirm a bullish reversal.

USOil Key Levels

Resistance Levels: $78.40, $80.00, $84.50
Support Levels: $72.80, $67.10, $65.30

USOil Long-Term Trend: Bullish

Analyzing price action, USOil has been undergoing a corrective phase following a strong rally, now finding support around $72.80. The price previously tested the Fibonacci 0.618 retracement level at $73.20 but was unable to sustain above it. The next key support zone is around $67.10, aligning with previous price reactions. A rebound from these levels would indicate renewed buying interest, while a break below could lead to further declines toward $65.30. Moving forward, if USOil maintains its position above the $72.80 support level, a reversal toward the $78.40 resistance level is possible. A confirmed breakout above $78.40 could propel prices higher, potentially reaching the previous high of $80.00.

USOil Short-Term Trend: Bullish

USOil is testing the bullish order block and showing signs of a potential breakout from the descending trendline. The 9-period SMA at $72.70 serves as immediate resistance, but a breakout above it could spark bullish momentum. The Stochastic indicator is in the oversold region, suggesting that buyers may soon regain control. A strong move above $72.80 could drive prices toward $78.40 and possibly higher. With forex signals also pointing to potential market shifts, traders are closely watching for confirmation of a breakout.

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