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Tuesday, May 16, 2017

WTI and Brent Crude Oil charts: sharp bear market rallies providing selling opportunities

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil plunged below 44 with a volume surge on May 5, but bounced up to close higher - forming a 'reversal day' bar (lower low, higher close) that marked the end of the corrective move from its Apr 12 top.

The subsequent rally took oil's price past its 20 day and 200 day EMAs towards 50, but faced strong resistance from the falling 50 day EMA and closed below the 200 day EMA in bear territory.

Bulls may heave a sigh of relief that the 'death cross' of the 50 day EMA below the 200 day EMA has been prevented. Bears will point out that the 3 months long bearish pattern of 'lower tops, lower bottoms' is still in force.

Daily technical indicators are looking bullish and showing upward momentum after correcting oversold conditions. However, MACD is still in bearish zone and RSI is in neutral zone.

The rally may continue till 51-51.50. Expect bears to start selling at any time.

Energy ministers of Russia and Saudi Arabia suggested that current production cuts should get extended till Mar '18. That triggered Monday's price spurt. Other OPEC and non-OPEC producers may not agree to any extended production cuts.

On longer term weekly chart (not shown), oil's price faced resistance from its 50 week EMA and closed below its three weekly EMAs in a long-term bear market. Weekly technical indicators are in bearish zones. Slow stochastic is showing positive divergence by touching a higher bottom.

Brent Crude Oil chart


The daily bar chart pattern of Brent Crude Oil dropped sharply towards 46.50 on May 5, but pulled back with strong volume support to close at 49.50. 

In the process, oil's price formed a 'reversal day' bar (lower low, higher close) that marked the end of the intermediate down trend from its Apr 12 top.

The subsequent rally faced resistance from the falling 50 day EMA, but oil's price managed to close just above its 200 day EMA in bull territory. 

Daily technical indicators have corrected oversold conditions and are showing upward momentum. Only Slow stochastic is in bullish zone. MACD is in bearish zone and RSI is in neutral zone.

The rally may have further upside - to 53-53.50. But bears are likely to 'sell the rise' at any time.

On longer term weekly chart (not shown), oil's price faced resistance from its 20 week EMA and closed at its 50 week EMA, but is trading well below its 200 week EMAs in a long-term bear market. Weekly technical indicators are in bearish zones. Slow stochastic is showing positive divergence by touching a higher bottom.

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