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Wednesday, October 22, 2014

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Oct2114

In the previous post, bears seemed to have total control of the daily bar chart pattern of WTI Crude oil. Positive divergences visible on technical indicators had raised some bullish hopes of a recovery. But such hopes were soon snuffed out.

Oil’s price continued to plummet and touched an intra-day low of 84 - easily achieving the lower target of 85. A day’s bounce stopped at the 86 level, followed by a plunge on huge volumes to an intra-day low of 80.

A ‘dead cat bounce’ took oil’s price to the 85 level. But that only provided another selling opportunity to bears. Can oil’s price fall even lower?

Daily technical indicators are suggesting further downside. MACD is below its signal line and inside its oversold zone. It has stopped falling, but not showing any signs of moving up. RSI emerged from its oversold zone, but is sliding down again. Slow stochastic managed to come out of its oversold zone, but its upward momentum is weak.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for seven straight weeks. Weekly technical indicators are in their respective oversold zones. The 20 week EMA has crossed below the 200 week EMA. A test of the Jun ‘12 low of 77.50 appears likely. The long-term bull market is coming to an end.

Brent Crude chart


The daily bar chart pattern of Brent Crude oil is resembling a waterfall due to its increasing downward momentum. The Jun ‘12 low of 88 was easily breached.

Oil’s price touched an intra-day low of 83, followed by a ‘dead cat bounce’ to 88. Bears used the opportunity to sell again.

Daily technical indicators are trying to correct oversold conditions. MACD is well inside its oversold zone, but trying to move up. RSI has formed a bullish ‘inverse head-and-shoulders’ pattern inside its oversold zone. Slow stochastic has just emerged from its oversold zone.

On longer term weekly chart (not shown), oil’s price has closed below its 200 week EMA for ten weeks in a row. Weekly technical indicators remain oversold. The 50 week EMA is about to cross below the 200 week EMA, and technically confirm a bear market.

1 comment:

Subhankar said...

Oil: Blind-sided by Technology - a boon for India?