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Tuesday, May 10, 2016

WTI and Brent Crude Oil charts: bears spoil the bull party

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil seemed to defy fundamentals and technicals as it continued its rally - giving a huge 20 points (77%) gain in 3 months from the Feb '16 low of 26.

Oil's price has traded above its 200 day EMA in bull territory for the past three weeks, giving bulls plenty to cheer about. However, the rally appears to have stalled just short of the 47 level.

For the past 6 trading sessions, oil's price has consolidated sideways in a range between 43 and 46 - closing near the lower edge of the range, but receiving support from the 20 day EMA.

Bulls still have a lot of work left. The 'golden cross' of the 50 day EMA above the 200 day EMA, which technically confirms the beginning of a bull market, is still awaited.

Daily technical indicators are in bullish zones, but looking bearish and showing negative divergences by failing to touch new highs with oil's price. MACD has crossed below its signal line in positive zone. RSI and Slow stochastic are falling towards their respective 50% levels.

It is quite likely that oil's price will return to bear territory below its 200 day EMA.

On longer term weekly chart (not shown), oil’s price has slipped below its 50 week EMA after a brief foray above it, and is trading well below its 200 week EMA in a long-term bear market. Weekly technical indicators are showing downward momentum.

Brent Crude Oil chart


The daily bar chart pattern of Brent Crude Oil received good support from its 200 day EMA and bounced up to the 48 level on Thu. Apr 28 - but was backed by falling volumes. 

On the next day, a 'reversal day' bar (higher high, lower close), backed by strong volumes, got formed. That seems to have ended the strong 21 points (78%) rally from the Jan '16 low of 27. 

Oil's price pulled back to its 200 day EMA, where it received good support for a few days. On Mon. May 9, oil's price plunged below its 200 day EMA with a sharp increase in volumes. That is usually a sign of bear domination.

Daily technical indicators are turning bearish. MACD has dropped from its overbought zone and crossed below its signal line. RSI and Slow stochastic have fallen from their overbought zones and slipped below their respective 50% levels.

Some more correction in oil's price is likely.

On longer term weekly chart (not shown), oil's price faced strong resistance from its falling 50 week and is trading well below its 200 week EMA in a long-term bear market. Weekly technical indicators are showing downward momentum.

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