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Tuesday, August 11, 2015

WTI and Brent Crude Oil charts: bear domination continues

WTI Crude chart

WTI Crude_Aug1015

The following remark was made in the previous post on the daily bar chart pattern of WTI Crude oil: “There is a possibility of an upward bounce – which bears are likely to use to sell again.”

Note that oil’s price did bounce up for a couple of days (Jul 28 & 29) but failed to cross above the 50 level or test resistance from its rapidly falling 20 day EMA. Bears resumed their selling. Oil’s price dropped below 44, but bounced up a bit to close just below the 45 level.

Can we expect even lower prices? Daily technical indicators are suggesting as much. All three are in oversold zones – but there is no sign of any reversal patterns yet. There may be brief bounces due to short-covering.

The prospect of oil supplies from Iran entering an already over-supplied market and lower Chinese off-take should keep prices depressed for some time.

On longer term weekly chart (not shown), oil’s price has been falling sharply after forming a downward ‘gap’ in Jul ‘15, and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are bearish and looking oversold.

Brent Crude chart

BrentCrude_Aug1015

The following comment appeared in the previous post on the daily bar chart pattern of Brent Crude oil: “A drop below 50 can’t be ruled out.” Oil’s price dropped to a low of 48 before bouncing up to close just above 50.

Strong volumes on down-days is a sign of bear domination. The briefest of rallies – due to short covering – are being followed by heavy selling.

Daily technical indicators are in oversold zones, but can remain oversold for long periods during a bear market. The Jan ‘15 low of 46 may be tested and breached.

On longer term weekly chart (not shown), oil’s price has fallen off a cliff after forming a rare weekly 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 looking oversold.

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