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Tuesday, May 14, 2013

WTI and Brent Crude Oil charts: counter-trend rallies?

WTI Crude chart

WTI Crude_May1313

The 1 yr daily bar chart pattern of WTI Crude oil shows a spirited rally by the bulls that propelled oil’s price above all three EMAs and into bullish territory. After bouncing up from the 86 level, oil’s price has formed a bullish pattern of higher tops and higher bottoms.

However, the volumes on down days continue to be very strong, which is an indication that bears are selling at every rise. Oil’s price touched a slightly lower top at 97, and needs to move past 98 for the rally to sustain.

Daily technical indicators are bullish, but showing signs of weakness. MACD is above its signal line in positive zone, but its upward momentum is slowing down. RSI is falling towards its 50% level. Slow stochastic is about to drop down from its overbought zone.

New sources of oil across North America are going to keep oil prices subdued for the next few years, as per this article.

Brent Crude chart

BrentCrude_May1313

The 1 yr daily bar chart pattern of Brent Crude oil rallied up to its falling 50 day EMA, faced resistance and has dropped back below all three EMAs. The bears are missing no opportunities to sell on rallies. Strong volumes on down days is a sign of ‘distribution’.

Daily technical indicators are turning bearish. MACD rose above its signal line in negative territory, but has started to turn down. RSI has slipped below its 50% level. Slow stochastic has dropped down from its overbought zone.

The down move is likely to resume.

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