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Tuesday, August 26, 2014

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Aug2514

The 6 months daily bar chart pattern of WTI Crude oil tried to stabilise around the 97-98 level, where it had previously received support in Mar ‘14. But bear selling put paid to bullish hopes. Oil’s price plummeted to the 93 level. The 50 day EMA crossed below the 200 day EMA, technically confirming a bear market.

Is it ‘game over’ for bulls? As they say: Every dark cloud has a silver lining. Note that oil’s price closed at its lowest level since Jan ‘14, but RSI and Slow stochastic have touched higher bottoms. The positive divergences can lead to an upward bounce. But bears are unlikely to release their control in a hurry.

There is a support zone between 90-92. If oil’s price falls below 90, it can drop to 85. Daily technical indicators are looking oversold. But in a bear market, oversold conditions can continue for a while.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for the first time since Dec ‘12. Weekly technical indicators are looking oversold. The 50 week EMA and the 20 week EMA have merged together and are falling towards the 200 week EMA. Some more correction can’t be ruled out.

Brent Crude chart


The following remarks were made in the previous post on the 6 months daily bar chart pattern of Brent Crude oil: “The ‘death cross’ of the 50 day EMA below the 200 day EMA has technically confirmed a bear market. All attempts at rallies are getting thwarted by the falling 20 day EMA.”

The falling 20 day EMA has continued to provide resistance to any attempt to rally. Oil’s price has bounced up a bit from the long-term support zone between 100-102. But it has been a weak bounce that will likely attract bear selling.

Daily technical indicators have corrected oversold conditions, but remain in bearish zones. MACD is touching its signal line at the edge of its oversold zone. RSI is moving sideways below its 50% level. Slow stochastic has emerged from its oversold zone. There are no signs of respite for the bulls.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for the second week in a row – some thing it has not done in the past 3 years. Weekly technical indicators are looking bearish, and a bit oversold. The long-term bull market is under threat.

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