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Tuesday, August 25, 2015

WTI and Brent Crude Oil charts: an update

WTI Crude chart

WTI Crude_Aug2415

The daily bar chart pattern of WTI Crude continued its descent - to a level not seen since Sep 2003. Huge volumes on down days indicate no respite from bear selling. The following comments from the previous post on WTI Crude oil may be worth repeating:

“Can we expect even lower prices? Daily technical indicators are suggesting as much… 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.”

Note that all three daily technical indicators have remained well inside their oversold zones during Aug ‘15. Just goes to show that prices can remain in oversold zones for long periods during bear markets.

At some point, bargain hunters may get tempted to step-in, but it is better not to attempt catching a ‘falling knife’.

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 oversold. MACD and RSI are showing positive divergences by not falling to new lows. Any technical bounce is likely to attract more bear selling.

Brent Crude chart

BrentCrude_Aug2415

The daily bar chart pattern of Brent Crude oil consolidated sideways in a range between 48 and 51 for a few days. A downward breakout on increasing volumes easily breached the Jan ‘15 low of 46 to touch a new low of 42.

Daily technical indicators are sliding deeper inside their oversold zones. Any consolidation or rally is likely to attract bear selling – so bottom-fishing is not recommended.

All three EMAs are falling and oil’s price is trading well below them in a long-term bear market that is showing no signs of ending any time soon.

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 bearish and oversold. MACD and RSI are showing positive divergences by not falling to new lows. A technical bounce is possible – but it should not be used as a buying opportunity.

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