Tuesday, November 26, 2013

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Nov2513

The 6 months daily bar chart pattern of WTI Crude oil is down in a bear market, and there are signs that oil’s price may fall lower. The 50 day EMA formed a bearish ‘rounding top’ pattern since Jul ‘13, and its ‘death cross’ below the 200 day EMA has technically confirmed a bear market.

Oil’s price has been consolidating sideways between 92 and 96 for the past 3 weeks. The falling 20 day EMA has thwarted attempts at up moves. Strong volumes on down days show that bears continue to be active. A drop to 85 is a possibility.

Daily technical indicators are giving mixed signals, which is often the case during periods of consolidation. MACD is rising above its signal line, but remains negative. Note that the signal line appears to be forming a saucer-like pattern, which has bullish implications.

RSI has turned down after failing to reach its 50% level. Slow stochastic moved up sharply above its 50% level, but its upward momentum is slowing. Attempts at an up move may attract more bear selling.

Brent Crude chart

Brent Crude_Nov2513

The 6 months daily bar chart pattern of Brent Crude oil started a spirited rally just when it looked like bears were getting the upper hand. However, the rally seems to have stalled near the 112 level (the previous top touched in Oct ‘13).

Part resolution of nuclear talks with Iran, followed by lifting of some of the economic sanctions including oil sales, spooked the bulls. Oil’s price dropped to 108 before recovering to close at 111 – in bull territory. The ‘death cross’ has been avoided – at least for now.

Daily technical indicators are looking bullish, and showing positive divergences by touching slightly higher tops than the ones touched in Oct ‘13. Oil’s price may try to cross above 112. However, once Iranian oil reaches full production and starts flowing into world markets, Brent Crude prices should start sliding.

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