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Tuesday, February 10, 2015

WTI and Brent Crude Oil charts: bear market rallies stalled?

WTI Crude chart

WTI Crude_Feb0915

In the previous post on the daily bar chart pattern of WTI Crude oil, bears appeared to be tightening their grip even as oil’s price was attempting to find a bottom at 45. After closing below the 45 level two days in a row, a small bullish ‘falling wedge’ pattern got formed – from which oil’s price broke out upwards.

A strong volume surge – typical of bear market rallies – propelled oil’s price above its 20 day EMA to the 55 level, where it is facing resistance from its falling 50 day EMA. A convincing move above the 50 day EMA and the 58 level may provide the first sign that a change of trend is in the offing.

However, oil’s price is trading well below its falling 200 day EMA in a long-term bear market. So, it may be too early to even hope for a trend change.

Daily technical indicators are looking bullish. MACD is rising strongly above its signal line, but has not yet entered positive territory. RSI has crossed above its 50% level, but its upward momentum is weakening. Slow stochastic is poised to enter its overbought zone.

On longer term weekly chart (not shown), oil’s price is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in the process of correcting oversold conditions. The bear market rally may not last much longer.

Brent Crude chart

BrentCrude_Feb0915

The daily bar chart pattern of Brent Crude oil, which had been consolidating sideways in a range between 47-52, broke out sharply on a strong volume surge and easily crossed above its 20 day EMA.

Resistance from its falling 50 day EMA has so far stalled the bear market rally. Only a convincing move above the medium-term moving average and the 64 level may weaken the bear grip.

However,  oil’s price is trading well below its 200 day EMA – which means a trend change isn’t going to occur anytime soon.

Daily technical indicators are looking bullish. MACD is rising sharply above its signal line, and is poised to enter its positive zone. RSI bounced up from its 50% level, but is turning down. Slow stochastic has re-entered its overbought zone after dropping below it.

On longer term weekly chart (not shown), oil’s price is trading well below its three weekly EMAs in a long-term bear market. Technical indicators have corrected oversold conditions, but are yet to turn bullish. Bears may strike at any time.

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