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Tuesday, August 27, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Aug2713

The 6 months daily bar chart pattern of WTI Crude oil continues to consolidate sideways with a slight downward bias – bouncing around in a rectangular band between 102 and 109. Oil’s price has received good support from its rising 50 day EMA, but is failing to sustain for long above its 20 day EMA.

Rectangular consolidations tend to be continuation patterns – which means the eventual break out is likely to be above 109. But rectangle patterns are unreliable; one needs to wait for the eventual break out before initiating action. The rising 200 day EMA indicates that the bull market is intact.

Daily technical indicators are in bullish zones, but MACD and RSI are forming bearish patterns of lower tops and lower bottoms. Strong volumes on down-days is also a bearish sign. However, growing political unrest in Egypt and Syria may keep oil’s price from sliding.

Brent Crude chart

Brent Crude_Aug2713

The 6 months daily bar chart pattern of Brent Crude oil had made a ‘false’ upward break out from its sideways consolidation at the beginning of the month, and had corrected from the 110 level down to its rising 50 day EMA. 

The bulls were in no mood to give up. Rising volumes propelled oil’s price past 110. The 50 day EMA is about to cross above the 200 day EMA – the ‘golden cross’ will technically confirm a return to a bull market after 5 months.

All three daily technical indicators are in bullish zones, but showing negative divergences by failing to touch higher tops. Though oil’s price formed a ‘reversal day’ pattern, volumes were low. The rally may continue a bit longer, before it faces strong resistance from the zone between 112.50 and 115.

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