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Tuesday, February 9, 2016

WTI and Brent Crude Oil charts: bear market rallies flounder

WTI Crude chart


The daily bar chart pattern of WTI Crude oil crossed above the falling 20 day EMA with strong volume support and touched an intra-day high of 35 on Jan 29. 

The falling 50 day EMA proved to be a strong resistance. Oil's price has dropped below its three EMAs, but is trying to find a bottom at the 30 level.

Daily technical indicators are not holding out much hope for bulls. MACD has started to turn down towards its rising signal line in negative zone. RSI faced resistance from its 50% level and is moving down. Slow stochastic reached the edge of its overbought zone, but has since dropped below its 50% level.

According to the latest forecast by IEA, global oil demand growth will ease back considerably in 2016.

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

Brent Crude chart


The daily bar chart pattern of Brent Crude oil is once again trading at a premium to WTI Crude, thanks to a bear market rally with good volume support during the second half of Jan '16.

The rally stalled as the falling 50 day EMA proved to be a tough hurdle. Oil's price is consolidating sideways within a small 'triangle' pattern, and trying to find a bottom at 32.

Daily technical indicators are turning bearish. MACD failed to enter positive zone. RSI has slipped below its 50% level. Slow stochastic formed a small 'double top' reversal pattern inside its overbought zone, and started to move down.

With OPEC countries failing to agree on a production cutback, and Iran's production ready to hit the market after lifting of economic sanctions, oil's price is likely to remain depressed due to an already oversupplied market.

On longer term weekly chart (not shown), oil's price is trading well below its three weekly EMAs in a long-term bear market. Weekly technical indicators are inside bearish zones after correcting oversold conditions.

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