Tuesday, May 27, 2014

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_May2314

The 6 months daily bar chart pattern of WTI Crude oil shows that bulls are clearly on top. All three EMAs are rising and oil’s price is trading above them. It closed above the 104 level after a month.

Daily technical indicators are looking bullish. MACD is rising above its signal line in positive territory. RSI is climbing towards its overbought zone. Slow stochastic is well inside its overbought zone.

However, volumes have dropped as oil’s price approached the 105 level, from where it has retreated twice before. Bears may try to defend the 105 level again.

Supply concerns due to unrest in Libya, less than expected output from Iraq and continued crisis in Ukraine are the reasons being put forth for the recent rise in price. Improving manufacturing data from USA and China may have also encouraged speculators to hit ‘buy’ buttons on their trading terminals.

On longer term weekly chart (not shown), all three EMAs are rising and oil’s price is trading above them in a long term bull market.

Brent Crude chart


After almost 5 months of gyrations, the 6 months daily bar chart pattern of Brent Crude oil has technically returned to a bull market. Why technically? Have a look at the 50 day EMA. The ‘death cross’ below the 200 day EMA in Jan ‘14 had signalled a bear market.

Since then, the 50 day EMA had failed to cross above the 200 day EMA despite oil’s price rising above its 200 day EMA on a couple of occasions. Last week, it managed the ‘golden cross’ as oil’s price rose above its Apr ‘14 top to touch the 111 level.

It may be a bit early for bulls to celebrate. All three technical indicators are looking bullish, but showing negative divergences by failing to touch higher tops. A correction may follow.

On longer term weekly chart (not shown), oil’s price is trading above its 200 week EMA and its entangled 20 week and 50 week EMAs. Weekly technical indicators have entered bullish zones.

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