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Tuesday, June 25, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Jun2513

The 1 yr daily bar chart pattern of WTI Crude oil briefly breached the resistance level of 98 to touch 99 on an intra-day basis. Sliding volumes and proximity to the resistance level were not encouraging signs for bulls. After forming a ‘reversal day’ pattern (higher high, lower close) oil’s price plunged below all its three EMAs before bouncing up.

For the last 3 months, oil’s price has made a bullish pattern of higher tops and higher bottoms. The 200 day EMA is gently rising. These are bullish signs. However, strong volumes on down days means bears are using every opportunity to sell.

Daily technical indicators are turning bearish. MACD is positive, but has crossed below its signal line. RSI has slipped below its 50% level. Slow stochastic has dropped below its 50% level.

For nearly 12 months, oil’s price has traded in a broad sideways range between 84 and 100 – providing decent trading opportunities. A convincing move above 100 can bring bulls to the fore.

Brent Crude chart

Brent Crude_Jun2513

Two weeks back, an analysis of the 1 yr daily bar chart pattern of Brent Crude oil contained the following concluding comments: “Remember that oil’s price is in a bear market, so any further up move is likely to attract selling pressure. The zone between 106 and 108 is going to provide strong resistance.”

Sometimes, chart patterns play out almost exactly as expected. Oil’s price rose above the 106 level four days in a row, but couldn’t quite get past the 107 level. The falling 200 day EMA wasn’t even tested. High volume selling pushed oil’s price down below its three EMAs – deeper inside a bear market.

Daily technical indicators have turned bearish. MACD has crossed below its signal line into negative territory. RSI has dropped below its 50% level. Slow stochastic is dropping like a stone towards its oversold zone. Bears have regained control.

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