The daily bar chart pattern of WTI Crude oil dropped to touch an intra-day low of 26 - a level last seen 13 years ago - but bounced up sharply to close at the level of the 50 day EMA.
Positive divergences visible on MACD and RSI, which touched higher bottoms while oil's price dropped lower, preceded the technical bounce. All three technical indicators are looking bullish and showing upward momentum.
Speculation about falling US shale oil output may have added fuel to the short-covering rally.
However, the 200 day EMA continues to fall, and oil's price closed well below it. Expect bears to pounce at any time.
On longer term weekly chart (not shown), oil’s price continues to trade below its three falling weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones.
Brent Crude Oil chart
The daily bar chart pattern of Brent Crude oil dropped to an intra-day low of 30, but the subsequent technical bounce floundered after facing stiff resistance from the falling 50 day EMA.
Falling volumes have thrown a wet blanket on any bullish enthusiasm for a continuation of the rally.
Daily technical indicators are showing some signs of bullishness. MACD is rising above its signal line in negative zone. RSI and Slow stochastic are above their respective 50% levels, but not showing much upward momentum.
In an effort to boost prices, Russia and Saudi Arabia have agreed to cut back on oil production - provided other oil producers do likewise. But a consensus has proved elusive so far.
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.