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Wednesday, August 14, 2013

WTI and Brent Crude Oil charts: in consolidation mode

WTI Crude chart

WTI Crude_Aug1313

The 6 months daily bar chart pattern of WTI Crude oil has been in a sideways consolidation mode for the past fortnight – bouncing around in a range between 102 and 109. Oil’s price fell below its 20 day EMA, jumped up to 109 and appeared to form a bearish double-top by forming a ‘reversal day’ pattern.

Five consecutive days of correction on rising volumes dropped oil’s price below its 20 day EMA once more, but the 50 day EMA provided good support. The subsequent bounce has taken oil’s price above all three EMAs. Such price volatility may be an investor’s nightmare but would have delighted traders.

Daily technical indicators are in bullish zones, but showing negative divergences by touching lower tops. If oil’s price fails to reach the 109 level during the current up move, it may breach the support from its 50 day EMA and the 102 level during the next fall. A convincing move above 109 will restore control to the bulls.

Brent Crude chart

BrentCrude_Aug1313

The 6 months daily bar chart pattern of Brent Crude oil has been consolidating sideways with an upward bias. After dropping to, and bouncing from its rising 50 day EMA oil’s price rose to touch 110, but formed a ‘reversal day’ pattern that ended the brief up move.

A corrective down move received good support from the rising 50 day EMA once more. Oil’s price has moved up above all three EMAs into bullish territory. The good news for bulls is that the 20 day EMA has crossed above the 200 day EMA after 5 months, and the 50 day EMA is showing signs of following suit.

Daily technical indicators are in bullish zones. MACD is positive, but sliding below its signal line. RSI and Slow stochastic have both crossed above their 50% levels. However, all three indicators are showing negative divergences by touching lower tops, while oil’s price rose to touch a higher top.

Some more consolidation is likely. A failure to cross 110 may encourage bears to launch a stronger attack.

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