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Tuesday, July 30, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Jul2913

Two weeks back, the daily bar chart pattern of WTI Crude oil was consolidating within a small ‘flag’ pattern between 104 and 106 after a sharp, vertical rise. Since a ‘flag’ tends to be a continuation pattern, an upward break out was expected with a target of 120. However, the price rise was too sharp and oil’s price had looked overbought.

The following remarks were made: “Oil’s price may pullback towards the 100 level before resuming its up move…Keep a stop-loss at 100 and stay invested.” Note that oil’s price did break out upwards and rose to about 109, before facing selling pressure. The 20 day EMA seems to be providing good downside support.

Daily technical indicators have corrected from overbought conditions. MACD made a bearish ‘rounding top’ pattern inside its overbought zone and has crossed below its signal line – but remains positive. RSI has dropped from its overbought zone and is drifting down towards its 50% level. Slow stochastic is looking bearish by falling sharply below its 50% level.

Stay invested with a stop-loss at 100. Add on an upward bounce from the 20 day or 50 day EMAs.

Brent Crude chart


Despite spending several consecutive trading sessions above its 200 day EMA, the 6 months daily bar chart pattern of Brent Crude oil has failed to extricate itself from a strong bear grip. After touching an intra-day high around the 109 level on Jul 19 ‘13, oil’s price formed a ‘reversal day’ pattern (higher high, lower close) and started drifting down lower.

Daily technical indicators are showing signs of weakness. MACD is positive, but has formed a bearish ‘rounding top’ pattern and crossed below its signal line. RSI has made a formed a bearish pattern of lower tops and lower bottoms, but has managed to stay above its 50% level. Slow stochastic formed a bearish ‘double-top’ pattern inside its overbought zone, and dropped sharply below its 50% level.

Some more consolidation is likely before oil’s price can make a more decisive attempt to get back into bull territory.

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