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Tuesday, October 7, 2014

WTI and Brent Crude Oil charts: bears have total control

WTI Crude chart

WTI Crude_Oct0614

The following comments appeared in a post two weeks back on the daily bar chart pattern of WTI Crude oil: “Another attempt at a rally is possible from the current level, but downward momentum appears to be building up again. That means a likely breach of the 90 level should follow shortly.”

Note that oil’s price rallied above its falling 20 day EMA, but faced strong resistance from the 95 level (its previous top) and its falling 50 day EMA. Bears used the rally to sell again. Oil’s price quickly breached the 90 level to touch a new 52 week low of 88 before bouncing up to close above the 90 level.

All three technical indicators are in their respective bearish zones, but are showing positive divergences by touching higher bottoms while oil’s price dropped lower. Expect another rally at any time – but bears are not going to miss the opportunity to sell again.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for five straight weeks. Weekly technical indicators are looking oversold. Oil’s price has formed a bearish pattern of lower tops and lower bottoms since touching a high of 112.50 more than a year back. A fall to 85 is a possibility.

Brent Crude chart

BrentCrude_Oct0614

The following comments appeared in a post two weeks back on the daily bar chart pattern of Brent Crude oil: “All three technical indicators are in bearish zones and looking a bit oversold, and also showing positive divergences by touching higher bottoms while oil’s price touched a lower bottom. Some sideways consolidation or a weak attempt at a rally will probably face more selling from bears.”

Note that a brief sideways consolidation was followed by an attempt to reach the 98 level. Resistance from the falling 20 day EMA provided the trigger for bears to resume selling. After touching a two-year low of 91, oil’s price bounced up to the 93 level.

All three technical indicators are inside their respective oversold zones, with Slow stochastic showing positive divergence by touching a slightly higher bottom. Some consolidation can be expected before the down move resumes.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for eight weeks in a row. The 20 week EMA has crossed below the 200 week EMA. Weekly technical indicators are looking oversold. The long-term bull market is under serious threat. A test of the Jun ‘12 low of 88 seems likely.

2 comments:

Subhankar said...

Opec split over tumbling crude prices but US companies safe for now

http://www.business-standard.com/article/economy-policy/opec-split-as-oil-prices-fall-sharply-114101500037_1.html

Stock Broker said...

good blog post