WTI and Brent Crude Oil charts: sharp bear market rallies floundering

WTI Crude chart

Oversold weekly technical indicators and positive divergences on weekly MACD and RSI had led to the following concluding comment in the previous post on the daily bar chart pattern of WTI Crude: “Any technical bounce is likely to attract more bear selling.”

Oil’s price rose sharply above its 20 day and 50 day EMAs in the last week of Aug ‘15 due to a combination of bottom fishing and short covering, but fell short of the 50 mark. Bear selling emerged as expected. Oil’s price has dropped below its 50 day EMA after a single day’s close above it.

Daily technical indicators have turned bullish, but their upward momentum is stalling. MACD is rising above its signal line in negative zone. RSI and Slow stochastic are above their respective 50% levels.

The ploy by OPEC to keep up with production in an effort to squeeze out US shale oil producers doesn’t seem to be working.

On longer term weekly chart (not shown), oil’s price is trading below its three weekly EMAs in a long-term bear market. Weekly technical indicators have recovered from oversold zones but remain bearish. The technical bounce was triggered by positive divergences in MACD and RSI, which touched higher bottoms while oil’s price dropped lower.

Brent Crude chart

The daily bar chart pattern of Brent Crude oil climbed quickly above its 20 day and 50 day EMAs - backed by strong volumes – but stopped just short of the 55 level. Bears emerged immediately to push oil’s price down below its 50 day EMA and the 50 level.

Daily technical indicators corrected oversold conditions and briefly turned bullish. MACD is still rising above its signal line in negative zone. RSI has slipped down below its 50% level. Slow stochastic faced resistance from the edge of its overbought zone but is still above its 50% level.

Oil’s price is trading below its falling 50 day and 200 day EMAs, and about to drop below its 20 day EMA in bear territory.

On longer term weekly chart (not shown), oil’s price formed a ‘reversal bar’ (higher high, lower close), and is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators corrected oversold conditions but are not showing much upward momentum. Oil’s price is likely to drift downwards.