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Tuesday, July 14, 2015

WTI and Brent Crude Oil charts: downward ‘gaps’ extinguish bullish hopes

WTI Crude chart

WTI Crude_Jul1315

The daily bar chart pattern of WTI Crude had been consolidating sideways during May and Jun ‘15, raising bullish hopes of an upward break out.

A resolution of Greece’s debt problems – though delayed – led to a drop from the consolidation zone between 57 and 62 with a downward ‘gap’.

The ‘gap’ is likely to act as a resistance zone to future up moves. Even if the ‘gap’ gets filled – fully or partly – the down move is expected to resume thereafter.

Daily technical indicators are looking bearish and a bit oversold. MACD is falling below its signal line in negative zone. RSI is at the edge of its oversold zone. Slow stochastic is trying to emerge from its oversold zone.

A nuclear deal with Iran concluded today after protracted negotiations. With economic sanctions likely to be removed soon, Iranian oil supply is going to put downward pressure on prices in an already oversupplied market.

On longer term weekly chart (not shown), oil’s price dropped below its 20 week EMA with a downward ‘gap’, and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones and showing downward momentum.

Brent Crude chart

Brent Crude_Jul1315

The daily bar chart pattern of Brent Crude oil had been consolidating sideways with a downward bias during May and Jun ‘15 within a ‘falling wedge’ pattern which usually has bullish implications.

A resolution of Greece’s debt problem caused a drop from the pattern with a downward ‘gap’ on Jul 6 ‘15 that extinguished all bullish hopes.

Note that an earlier downward ‘gap’ on the chart – formed back in Nov ‘14 – remains unfilled till date. Such ‘gap’s tend to act as resistance zones to future up moves.

The Iranian nuclear deal announced today will be followed by removal of economic sanctions. Iranian oil supply will add to the existing glut in the oil market.

Daily technical indicators are in bearish zones but not showing any signs of upward momentum.

On longer term weekly chart (not shown), oil’s price formed a downward ‘gap’ below its 20 week EMA and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones and showing downward momentum.

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