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Tuesday, June 14, 2016

WTI and Brent Crude Oil charts: golden crosses technically confirm bull markets

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil continued its strong rally from the Feb '16 low of 26 - nearly doubling in price by touching an intraday high of 51.67 on Jun 9.

However, oil's price formed  'reversal day' bar (higher high, lower close) that often marks an intermediate top, and dropped below its 20 day EMA.

The convincing 'golden cross' of the 50 day EMA above the 200 day EMA has technically confirmed a return to a bull market. The 200 day EMA has formed a bullish 'saucer' pattern.

Daily technical indicators have corrected overbought conditions. MACD and RSI are still in bullish zones. Slow stochastic has slipped below its 50% level. Note that MACD and Slow stochastic are showing negative divergences by failing to touch new highs with oil's price.

More correction may be on the cards. Bulls have been using price dips to buy. They may do so again.

How much further can oil's price rise? One analyst has already talked about levels of 60 and 70. However, higher prices will encourage resumption of fracking for shale oil, which may put a lid on further price rise. 

Canadian production is slowly coming back on track after disruption due to wild fire. Nigerian and Libyan oil production remains uncertain due to militant activity.

On longer term weekly chart (not shown), oil’s price has formed a weekly 'gravestone doji' candlestick that often marks an intermediate top. The 200 week EMA continues to fall, and oil's price is trading well below it in a long-term bear market. Weekly technical indicators are in the process of correcting overbought conditions.

Brent Crude Oil chart


The daily bar chart pattern of Brent Crude Oil almost touched the 53 level intraday on Jun 9 - gaining 95% from its Jan '16 low of 27.10 - but formed a 'reversal day' bar (higher high, lower close) and corrected down to its 20 day EMA.

The 50 day EMA has crossed above the 200 day EMA - the 'golden cross' that technically confirms a return to a bull market. Price dips can be used to buy.

Daily technical indicators have corrected overbought conditions, but remain in bullish zones. MACD and Slow stochastic failed to touch new highs with oil's price. The negative divergences may have triggered the price correction.

On longer term weekly chart (not shown), oil's price closed above its 20 week and 50 week EMAs for the 5th week in a row, but well below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are correcting overbought conditions.

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