Tuesday, October 8, 2013

WTI and Brent Crude Oil charts: consolidating sideways

WTI Crude chart

WTI Crude_Oct0713 

The 6 months daily bar chart pattern of WTI Crude oil consolidated sideways between 101 and 104 levels for the past two weeks. It bounced up strongly after dropping to 101, but faced resistance from its falling 20 day EMA.

A tropical storm in the Gulf of Mexico caused a production shutdown and a brief spike in oil’s price. But the storm blew over without causing much damage, and production is returning to normal.

Daily technical indicators are in bearish zones. MACD is moving up towards its falling signal line in negative territory. RSI moved up towards its 50% level but could not cross above it. Slow stochastic emerged from its oversold zone, but remains well below its 50% level. All three indicators have been in down trends since Jul ‘13, touching lower tops and lower bottoms.

Oil’s price is trading above its rising 200 day EMA, and remains in a bull market. Strong volumes on down days is an indication that bears are active. 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.

Brent Crude chart


The 6 months daily bar chart pattern of Brent Crude oil is trying very hard to stay above its 200 day EMA. For the past two weeks, oil’s price has been consolidating sideways between 107 and 110.

Such consolidations within a rectangular band tend to be continuation patterns. Since the pattern has been forming after oil’s price dropped from a recent peak of 117, the likely break out from the pattern is downwards. However, rectangles are unreliable. It is better to wait for the eventual break out before taking a sell/buy decision.

Daily technical indicators are showing some bullish signs. MACD has formed a rounding-bottom pattern and moved up to touch its falling signal line in negative territory. RSI is gradually moving up towards its 50% level. Slow stochastic has risen past its 50% level.

All three indicators are showing negative divergences by touching lower lows than the ones touched in Aug ‘13, while oil’s price touched a higher low. Trading volumes have been mostly stronger on down days. The balance is somewhat tilted towards the bears.

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