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Tuesday, April 12, 2016

WTI and Brent Crude Oil charts: will bear market rallies falter again?

WTI Crude Oil chart


The following comments appeared in the previous post on the daily bar chart pattern of WTI Crude oil: "Oil's price can correct some more. Bulls may use the dip to mount another attempt at crossing the 200 day EMA."

Oil's price corrected deeper into bear territory below its 20 day and 50 day EMAs. Bulls used the dip to make another attempt to cross above its 200 day EMA - but haven't been successful so far.

Even if oil's price crosses above its 200 day EMA, the strong resistance zone between 42-44 will be more difficult to overcome.

So, what caused the renewed price spurt? Was it hopes that the oil producer's meeting at Doha this weekend will tackle the supply glut? Or, was it due to a weaker US Dollar (which is negatively correlated with oil's price)? Or, signs of greater off-take from China? 

All of the above - as per this article from Reuters.

Daily technical indicators are in bullish zones, and showing good upward momentum. But yesterday's (Apr 11) volume bar is a sign that bulls may be running out of steam.

On longer term weekly chart (not shown), oil’s price closed above its rising 20 week EMA, but is trading below its falling 50 week and 200 week EMAs in a long-term bear market. Weekly MACD is rising in negative zone. RSI has crossed above its 50% level. Slow stochastic looks ready to re-enter its overbought zone. 

Brent Crude Oil chart


The daily bar chart pattern of Brent Crude oil shows a renewed attempt by bulls to overcome a strong bear stranglehold. After falling below its 20 day and 50 day EMAs, oil's price rose sharply to touch 43 - its highest level during the year.

Oil's price has so far failed to test resistance from its sliding 200 day EMA - but may do so if oil producers agree to cut production. Unlikely, since Iran and Saudi Arabia are at loggerheads.

All three daily technical indicators - despite their upward momentum - are showing negative divergences by failing to touch new highs with oil's price.

Bears may attack with their 'sell on rise' strategy at any time.

On longer term weekly chart (not shown), oil's price closed above its 20 week 
EMA, but is trading below its falling 50 week and 200 week EMAs. Weekly MACD is rising in negative zone. RSI has crept above its 50% level. Slow stochastic is inside its overbought zone. There is very little chance of the long-term bear market ending in the near future.

1 comment:

Subhankar said...

Oil Drops After Output Talks Fail Amid Saudi Demands Over Iran

http://www.bloomberg.com/news/articles/2016-04-17/oil-freeze-talks-end-in-failure-amid-saudi-demands-over-iran