Tuesday, October 23, 2012

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Oct2212

In the previous post two weeks back, the following observations were made:

  1. If oil’s price can bounce up from the 88 level and move past 101, a bullish pattern of higher bottoms and higher tops will get formed. But it is a big ‘if’.
  2. The fall below the 200 day EMA was accompanied by a sharp volume spike. That means the 200 day EMA is likely to provide strong resistance to future up moves.
  3. Any upward move is likely to face resistance from the falling 20 day and 50 day EMAs.

Note that oil’s price did bounce up from the 88 level, but found resistance from the falling 20 day and 50 day EMAs. On a couple of occasions, the intra-day highs touched the 200 day EMA and retreated. The high volumes on the last two down days is an indication that bears are gaining control. The support from the 88 level may get breached.

Daily technical indicators are looking bearish, which means the correction isn’t over yet. MACD is touching its signal line in negative territory. RSI failed to move above its 50% level and has started falling. Slow stochastic is about to drop below its 50% level.

Oil’s price is trading below all three EMAs and is back in a bear market.

Brent Crude chart


The possibility of Brent Crude’s price dropping below the support level of 110 was mentioned in the previous post. An intermediate down trend is in progress. Higher volumes on the previous three down weeks is a sign of distribution.

The 20 week EMA is about to cross below the 50 week EMA, which is bearish in the medium term. However, the 200 week EMA is still rising – so the long-term bull market is intact.

Weekly technical indicators are beginning to turn bearish. MACD is barely positive, and may cross below its signal line into negative territory soon. RSI has slipped below its 50% level. Slow stochastic has dropped from its overbought zone and falling rapidly towards its 50% level.

Be prepared for a deeper correction.

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