USO still stuck within tight trading range
United States Oil Fund (USO) Technical Analysis Report for Sep 25, 2020 | by Techniquant Editorial Team
USO finished the week -2.44% lower at 28.35 after losing $0.15 (-0.53%) today on low volume. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (USO as at Sep 25, 2020):
Friday's trading range has been $0.39 (1.38%), that's far below the last trading month's daily average range of $0.69. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for USO. Prices continued to consolidate within a tight trading range between 27.66 and 28.84 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, one bullish candlestick pattern matches today's price action, the Bullish Spinning Top.
After spiking up to 28.56 during the day, the ETF found resistance at the 20-day moving average at 28.54. The last time this happened on Wednesday, USO actually gained 1.68% on the following trading day. After having been unable to move lower than 28.13 in the prior session, the market found buyers again around the same price level today at 28.17.
USO shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Buying might speed up should prices move above the close-by swing high at 28.84 where further buy stops could get activated. Selling might accelerate should prices move below the nearby swing low at 27.66 where further sell stops could get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Close to Swing Low" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for USO. Out of 693 times, USO closed higher 52.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after five trading days, showing a win rate of 54.69% with an average market move of 0.19%.