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Tuesday, October 22, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Oct2113

The following remarks were made in a technical analysis of the daily bar chart pattern of WTI Crude oil two weeks ago: “A test of support from the 200 day EMA is likely. In case the 200 day EMA is breached, expect support from the zone between 97 and 99.”

Thanks to adequate US supplies, oil’s price breached the 100 mark for the first time in three months and closed just below its 200 day EMA. Volumes on down-days were strong, indicating that the bears aren’t done with their selling yet.

Daily technical indicators are bearish. MACD is falling below its signal line in negative territory. RSI is falling towards its oversold zone. Slow stochastic has re-entered its oversold zone. Note that RSI and Slow stochastic are showing positive divergences by failing to drop to a new low with oil’s price.

Any bounce up in price from the current level will be a selling opportunity, as oil’s price continues in a 2 months long down-trend.

Brent Crude chart

BrentCrude_Oct2113

The daily bar chart pattern of Brent Crude oil broke out upwards from the consolidation range between 107 and 110, and rose to touch a high of 112. But lack of volume support failed to sustain the price break out.

Oil’s price has slipped down into the consolidation zone between 107 and 110. Brent Crude prices have remained high due to supply disruptions in Libya, Syria and North Sea and a European embargo on purchase of Iranian crude. 

Daily technical indicators are turning bearish. MACD failed to enter positive territory, and is touching its signal line. RSI has slipped below its 50% level. Slow stochastic is about to drop below its 50% level.

With growth slowing in BRICS countries and growth in Europe remaining sluggish, speculators may be forced to liquidate their bullish positions leading to a fall in oil’s price below its 200 day EMA.

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