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Tuesday, August 23, 2016

WTI and Brent Crude Oil charts: end of short-squeeze rallies?

WTI Crude Oil chart


The 'V' shaped rally on the daily chart pattern of WTI Crude Oil surged past the 49 level before correcting and closing below 47.50. 

Shorts got squeezed after OPEC's announcement of a meeting in end-Sept. '16 to discuss a possible output freeze. Going by recent experience, OPEC members are unlikely to agree on any cut in output.

Technically, there are bullish and bearish signals on the chart. Both the 20 day and 50 day EMAs have formed bullish 'rounding bottom' patterns. The 50 day EMA has moved up without crossing below the 200 day EMA, keeping the bull rally intact.

However, oil's price has corrected after touching a lower top, and daily technical indicators are in the process of correcting overbought conditions.

A pullback towards the 200 day EMA is likely. 

A convincing move above 52 is required to vanquish the bears. That may be a tough ask with more US rigs coming back into production and shale oil fracking beginning to pick up.

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

Brent Crude Oil chart


The daily bar chart pattern of Brent Crude Oil rallied past the 51 level but formed a small 'reversal day' pattern (higher high, lower close) on Fri. Aug 19 and corrected down to the 49 level.

Bulls managed to prevent the 'death cross' of the 50 day EMA below the 200 day EMA. All three EMAs are rising again, and oil's price is trading above them in bull territory. 

Daily technical indicators are in the process of correcting overbought conditions. A pullback towards the 200 day EMA is a possibility. A convincing move above the 53 level is needed before bulls can regain control of the chart.

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 only Slow stochastic is showing upward momentum.

1 comment:

Subhankar said...

Boom, Balance Or Bust: What's Next For Oil?

http://oilprice.com/Energy/Energy-General/Boom-Balance-Or-Bust-Whats-Next-For-Oil.html