Oil ETFs Bounce at 200-Day Average

May 19th at 8:30am by John Spence

Oil exchange traded funds have been hit by margin hikes and a rally in the dollar, but they’ve encountered buying interest this week at a key technical level.

The $1.7 billion U.S. Oil Fund (NYSEArca: USO) is down nearly 8% over the past month. However, the ETF bounced this week at its 200-day moving average.

Yet “considerable technical weakness remains,” says David Chojnacki, a market technician at Street One Financial, as the oil ETF’s 20-day moving average crosses below the 50-day.

He maps out $42 a share as the area the ETF needs to regain to resume the longer term trend to the upside. “On the positive side, in the last two recent sessions it bounced off its 200-day moving average,” Chojnacki said.

The analyst said with the oil fund holding long term support and experiencing short term headwinds, it may establish a trading range between $37.77 and $42 a share.

Other ETFs tracking the oil market include U.S. 12 Month Oil Fund (NYSEArca: USL), U.S. Brent Oil Fund (NYSEArca: BNO) and PowerShares DB Oil (NYSEArca: DBO).

U.S. Oil Fund

Chart source: StockCharts.com

Editor’s note: For more information on Street One ETF research, contact pweisbruch@streetonefinancial.com.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.