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Tuesday, April 15, 2014

WTI and Brent Crude Oil charts: bulls fight back

WTI Crude chart

$WTIC-001-001

In a previous update to the daily bar chart pattern of WTI Crude oil, a bearish ‘rising wedge’ pattern was forming. It was expected that oil’s price would break downwards from the wedge. Since technical analysis is not a science but based on empirical observations, patterns don’t always play out as expected.

Note that oil’s price broke out upwards from the ‘rising wedge’, but there was no accompanying surge in volumes to validate the upward break out. Oil’s price soon broke down sharply below its 20 day and 50 day EMAs and the lower edge of the wedge, but found good support from its 200 day EMA.

The subsequent rally took oil’s price above its 20 day and 50 day EMAs – supported by good volumes. But the rally seems to be stalling near its previous high of 105. Though oil’s price is trading well above its three EMAs in a bull market, the hurdle at 105 needs to be crossed before bulls can regain full control.

Daily technical indicators are looking bullish. MACD is rising above its signal line in positive territory. RSI is moving sideways above its 50% level. Slow stochastic is inside its overbought zone, but turning down.

On longer term weekly chart (not shown), all three weekly EMAs are rising and oil’s price is trading above them in a long-term bull market.

Brent Crude chart

BrentCrude_Apr1414

The daily bar chart pattern of Brent Crude oil had dropped below all three EMAs into bear territory on Mar 5 ‘14. For the next 5 weeks, the falling 200 day EMA provided strong resistance to all attempts by bulls to rally.

A high volume day on Apr 2 ‘14 took oil’s price down to a low of 104 – but it turned out to be a sign of selling exhaustion. The subsequent rally has propelled oils’ price above all three EMAs back into bull territory. However, the rally has been accompanied by sliding volumes, which raises questions about its sustainability.

Daily technical indicators are looking bullish. MACD has just entered positive zone above its rising signal line. RSI has moved above its 50% level. Slow stochastic is inside its overbought zone. The rally may continue a bit longer.

However, a failure to move above its Mar ‘14 top of 112 would mean a continuation of a bearish pattern of lower tops and lower bottoms that began in early Dec ‘13.

On longer term weekly chart (not shown), oil’s price bounced up from support of its rising 200 week EMA and is trading above all three weekly EMAs.

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