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Tuesday, February 12, 2013

WTI and Brent Crude Oil charts: back in bull markets

WTI Crude chart

WTI Crude_Feb1213

The ‘golden cross’ of the 50 day EMA above the 200 day EMA on the 6 months daily chart of WTI Crude oil technically confirmed a return to a bull market. Shortly thereafter, oil’s price touched an intra-day high above the 98 mark – a level last touched back in Sep ‘12.

However, all three technical indicators formed double-top reversal patterns that led to a correction down to the 20 day EMA. Oil’s price appears to have received good support from its short-term moving average. Of late, volumes on up-days have been higher than on down-days. The rally may resume after the brief correction.

Daily technical indicators have corrected overbought conditions, and seem to be supporting a resumption of the up move. MACD is below its signal line in positive zone, but has stopped falling. RSI dropped from its overbought zone, but has turned up before reaching its 50% level. Slow stochastic dropped sharply below its 50% level from its overbought zone, but is turning up.

WTI Crude oil’s price seems poised to reach the three figure mark in the near future.

Brent Crude chart

Brent Crude_Feb1213

The 6 months daily chart pattern of Brent Crude oil rallied sharply during the past month, without a hint of a correction. After hesitating for a few days near the support-resistance level of 117.50 (reasons mentioned in the previous post), oil’s price shot up to 119 before pulling back towards the support-resistance level.

Note that two of the three technical indicators – RSI and slow stochastic – showed negative divergences by failing to touch higher tops. RSI formed a double-top reversal pattern inside its overbought zone. Slow stochastic touched a lower top.

The break out above the support-resistance level of 117.50 was not accompanied by a substantial increase in volumes. That opens up the possibility of the current pullback continuing a bit longer before the up move can resume.

The rise in oil’s price may be attributed to some supply constraints from Oklahoma and Nigeria, but more due to speculation about greater imports by China and tensions in Iran.

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