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Tuesday, October 13, 2015

WTI and Brent Crude Oil charts: false breakouts from triangles?

WTI Crude chart

WTIC_Oct1215

The daily bar chart pattern of WTI Crude oil consolidated sideways within a ‘symmetrical triangle’ pattern for almost 5 weeks before breaking out upwards on Oct 6 ‘15.

Oil’s price rallied for the next 3 days to touch an intra-day high of 51 on Oct 9, but formed a ‘reversal day’ pattern (higher high, lower close) that appears to have terminated the rally from the Aug 24 low.

On Oct 12, oil’s price dropped sharply towards the top of the ‘triangle’, but managed to close above its 20 day and 50 day EMAs.

Is the pullback to the top of the ‘triangle’ a buying opportunity? Not really. Note that volumes on the two down-days last week exceeded the volumes on the three up-days. That shows strong bear presence.

Also, oil’s price closed well below its falling 200 day EMA in a bear market. The ‘gap’ that formed on the chart in early July has not been tested yet. Bears will dominate till the ‘gap’ is convincingly filled.

Daily technical indicators are in bullish zones, but turning bearish. MACD has turned down after facing resistance from the edge of its overbought zone. RSI formed a ‘double top’ reversal pattern and is falling towards its 50% level. Slow stochastic has dropped down from its overbought zone.

On longer term weekly chart (not shown), oil’s price managed to close above its falling 20 week EMA last week before slipping down, and is trading below its three weekly EMAs in a long-term bear market. Weekly MACD and RSI remain in bearish zones, and are showing negative divergences by failing to touch a new high with oil’s price. Slow stochastic has just crossed above its 50% level.

Brent Crude chart

BRENT_Oct1215

The daily bar chart pattern of Brent Crude oil broke out sharply above a sideways consolidation within a ‘triangle’ pattern with good volume support on Oct 6 ‘15.

Oil’s price crossed above 54 intra-day on Oct 9, but formed a ‘reversal day’ pattern (higher high, lower close) that extinguished any bullish hopes and ended the rally from the Aug 24 low.

On Oct 12, oil’s price dropped sharply with a volume spike towards the top of the ‘triangle’, but found support from its 20 day EMA and managed to close above its 20 day and 50 day EMAs.

Note that oil’s price is trading well below its falling 200 day EMA in a bear market. So, the pullback towards the top of the ‘triangle’ is likely to become an ‘end run’ below the triangle.

Daily technical indicators are in bullish zones, but turning bearish. MACD is moving sideways in positive zone. RSI is falling sharply towards its 50% level. Slow stochastic has dropped down from its overbought zone.

On longer term weekly chart (not shown), oil’s price faced resistance from its 20 week EMA, and is trading below its three weekly EMAs in a long-term bear market. Weekly technical indicators corrected oversold conditions but remain in bearish zones.

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