Many ETFs and stocks have been rallying over the last four months, and some have been making new all-time highs. The OIH Oil Services ETF is not one of them. In fact, OIH is more than 20% below its September 2023 peak, which means it’s on very few trading radar screens right now. However, the ETF remains in a multiyear uptrend, and if the trend is going to hold, OIH could be getting ready for a major upswing very soon. Short-term resistance lines Let’s first start by looking at OIH’s daily chart. It’s not pretty, at least not yet. OIH has repeatedly failed to puncture its declining 50-day moving average and the downtrend line that started near the September high point. We’ve seen various attempts to break both lines, but upside follow through has been lacking. While we care about the bigger picture more than the short-term, we can’t expect a sizable upswing to occur if OIH continues to fail here. So, step one is to emphatically move through both resistance lines. The ETF is trying to do that now. Crude oil All energy-related stocks and ETFs are beholden to crude, which has been struggling since topping out in June 2022. It has shown flashes of bullish action since then, but so far it has lacked the necessary staying power to leverage any of the would-be bullish patterns over the last 20 months. Crude oil recently bounced from its lows and is trying, once again, to leverage a potential bullish chart formation. Needless to say, finally capitalizing on a constructive technical set up would help its prospects and the ETFs that are tied to it. Buying weakness So, if OIH can finally bust through its multi-month downtrend line and its 50-day moving average and crude can take advantage of its current bullish pattern, then OIH will have a good chance to move higher, as well. We’ve seen it before. This chart shows exactly how well the ETF has adhered to this multiyear upward sloping trading channel. OIH has had four major rallies late since 2020, with trough-to-peak percent moves ranging from +49% to +167%. Each of these sizable extensions didn’t happen on breakouts; they happened on bounces near its long-term uptrend line when OIH was out of favor… like now. DISCLOSURES: THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
