WTI Crude chart
Two weeks back, the 6 months daily bar chart pattern of WTI Crude oil had touched the 98 level but corrected after double-top reversal patterns were visible on the technical indicators. The correction received good support from the 20 day EMA, and the up move resumed.
Oil’s price touched the 98 level for a second time on Feb 13, forming a small double-top pattern, and also formed a ‘reversal day’ pattern (higher high, lower close). All three technical indicators showed negative divergences by reaching lower tops. The combination of all these bearish signals led to a swift drop below the 200 day EMA.
Is the brief foray into bull territory over? The strong volumes on 2 down-days last week seem to indicate that. Daily technical indicators are looking bearish, which means the correction may not be over yet.
Brent Crude chart
The following comments were made two weeks ago about the 6 months daily bar chart pattern of Brent Crude oil: “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.”
Oil’s price dropped to its 50 day EMA, where it received good support and bounced up. Is the correction over? May be not yet. Last week’s down-day volumes were stronger than the volumes on the upward bounce.
Also, RSI and slow stochastic are showing negative divergences by touching lower bottoms (than the ones in Jan ‘13), while oil’s price touched a higher bottom. A test of support from the 200 day EMA is a possibility.
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