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Tuesday, September 24, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Sep2313

The 6 months daily bar chart pattern of WTI Crude oil has corrected below its 20 day and 50 day EMAs, and may move down further to test its rising 200 day EMA.

Negative divergences in all three daily technical indicators – observed in a post two weeks back – had given advance warning of the likely correction. As the possibility of an air attack on Syria by the US receded, speculators resorted to profit booking.

Daily technical indicators are looking quite bearish, but haven’t reached oversold conditions yet. MACD has slipped into negative territory below its signal line. RSI has dropped below its 50% level, and still falling. Slow stochastic has just entered its oversold zone.

All three indicators are again showing negative divergences by falling below their respective Aug ‘12 lows, while oil’s price is above its Aug ‘12 low of 102. Strong volumes on down days is another indication that bears are on top.

Brent Crude chart

Brent Crude_Sep2313

The brief foray into bull territory, followed by a speculative spurt above the 117 level on strong volumes, appears to be coming to an end. The 6 months daily bar chart pattern of Brent Crude oil is struggling to stay above its 200 day EMA.

Strong volumes on down days and a bearish reversal pattern formed by the Slow stochastic indicator – observed two weeks back – had warned about a drop in price to the 50 day EMA. Active bears are now on the verge of pushing oil’s price back into a bear market.

Daily technical indicators are looking bearish. MACD has dropped inside negative territory. RSI is treading water below its 50% level. Slow stochastic has re-entered its oversold zone after a brief effort to move up.

Some more correction is likely.

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