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Tuesday, April 23, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Apr2313

The 1 yr daily bar chart pattern of WTI Crude oil had been trying to stay in bullish territory since the beginning of this year. But a sharp high-volume drop below all three EMAs and the Mar ‘13 low has put paid to bullish hopes.

Note that oil’s price has bounced up from the edge of a support zone between 84 and 86. Will the support hold – like it did during Oct – Dec ‘12, or is it just a ‘dead cat bounce’? Bearish daily technical indicators seem to suggest the latter.

MACD is below its signal line in negative territory. RSI has bounced up from the edge of its oversold zone, but remains below its 50% level. Slow stochastic is trying to emerge from its oversold zone.

If oil’s price drops below 84, it is likely to test the next support zone between 77 and 81.

Brent Crude chart

BrentCrude_Apr2313

The following were the concluding comments in an analysis of the daily bar chart pattern of Brent Crude oil two weeks back: “Oil’s price may attempt to bounce up, but bears are likely to sell again. Strong volumes on down days indicate such a possibility.”

An attempt to move up to 106 was met with heavy selling by bears, and a drop below 97. Another upward bounce is in progress, but receding volumes indicate that the bounce is probably due to short covering.

Daily technical indicators have recovered from oversold conditions, but remain bearish. Oil is in a bear market. Every rise will be a selling opportunity for bears. A drop to 90 is a possibility.

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