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Tuesday, May 24, 2016

WTI and Brent Crude Oil charts: an update

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil received good support from its rising 20 day EMA and rallied to a new high if 49.50 on Wed. May 18, but formed a 'reversal day' bar (higher high, lower close) and slipped down.

Note that volumes were considerably lower during the rally to the new high - which was a signal that the rally was not going to be sustainable.

Daily technical indicators are correcting overbought conditions. MACD faced resistance from the edge of its overbought zone and is about to cross below its signal line. RSI has dropped down from its overbought zone. Slow stochastic has fallen to the edge of its overbought zone.

MACD and Slow stochastic are showing negative divergences by failing to touch new highs with oil's price. Some more correction or consolidation is likely. 

The 50 day EMA has crossed above the 200 day EMA - the 'golden cross' that confirms a return to a bull market. But it is not yet a convincing cross.

On longer term weekly chart (not shown), oil’s price is trading above its 20 week and 50 week EMAs, but well below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but not showing much upward momentum.

Brent Crude Oil chart

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The daily bar chart pattern of Brent Crude Oil bounced up into bull territory above its three EMAs with strong volume support, and rose almost to the 50 level on Wed. May 18 but formed a 'reversal day' bar and corrected down.

The 'golden cross' of the 50 day EMA above the 200 day EMA that technically confirms a return to a bull market is still awaited.

All three daily technical indicators are showing negative divergences by failing to touch new highs with oil's price - hinting at more correction or consolidation.

Supply outages in North America and Africa have been largely responsible for the recent rise in oil prices.

On longer term weekly chart (not shown), oil's price is trading above its 20 week and 50 week EMAs, but well below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are in bullish zones, but Slow stochastic is looking overbought.

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